Multiple Choice for Complex Financial Advice
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Multiple choice for Complex Financial Advice
FNSFPL602A Determine client requirements and expectations for clients with complex needs (20)
1. At which client meeting is it best to explain the 6 steps to the financial planning process
a. Before first face to face contact
b. During the first meeting
c. At the advice presentation meeting
d. During the implementation process
2. Which of the following needs to be disclosed to the client during the initial meeting with a financial planner
a. The services and capacity of the individual planner and their organisation
b. The Product Disclosure Statements (PDS)
c. The amount of Continued Education Points (CEP) the adviser has for the current financial year
d. The relationship between the company and the charities it supports
3. Before any initial fees are charged the client must fully understand the amount, agree in writing and (which of the following)
a. The exact scope of the service that will be provided for the fee
b. Which products they will be recommended
c. Be able to claim a tax deduction
d. Have assurance their goals will be achieved
4. Relationship with other financial services needs to be disclosed to the prospective client when there is a monetary or non-monetary reward for a referral. An example of such is
a. Taking a client to a football game
b. An adviser going to Hawaii for a holiday paid for by an accountant
c. An adviser attending an information session at a product providers office
d. A client taking another client to the theatre
5. When disclosing fees to a client it is required that ongoing fees as a percentage be shown with
a. An example showing the Funds Under Management (FUM), percentage fee and an example b. Only the dollar amount needs to be shown
c. Only the percentage needs to be shown
d. No further disclosure is required as long as the client understands verbally
6. Clients with special needs will mean that as an adviser you must
a. Ensure a third party is present who has been appointed as a power of attorney as they are required to act in the clients best interest
b. Ensure the person with special needs fully understands your advice before proceeding
c. Not change your presentation as you believe everything that needs to be covered is included and will be understood by the client
d. Not ask any personal questions as they may be misinterpreted
7. Which of the following statements best describes what is required for internal and external complaints handling/resolution
a. The process must be clearly documented in the Fact Find
b. The process must be clearly documented in the Financial Services & Credit Guide (FSCG)
c. The process must be clearly documented in the Statement of Advice (SOA)
d. The process must be clearly documented during the implementation stage
8. Which of the following encourages a client to ask questions
a. Open ended questions, building rapport, creating trust
b. Close ended questions, building rapport, creating trust
c. Open ended questions, closing your eyes, speaking continuously
d. Speaking continuously, closing your eyes, creating trust
9. Most people do not know how much they spend each year. An excellent way to determine this figure is to:
a. Deduct their annual savings from their pre-tax income
b. Deduct their annual savings from their household income (after tax)
c. Add their annual savings to their pre-tax income d. Add their annual savings to their household income (after tax)
10. To provide meaningful advice on funds required in retirement it is important that the client understands
a. The lifestyle they would like to lead and how this compares to their current expenditure
b. The life expectancy age and this figure is used as a target in modelling
c. That inflation is not a factor
d. Holding the majority of their savings outside of super will result in a better outcome due to tax efficiencies
11. An important part of being a financial adviser is educating and helping clients on making realistic goals. A further area around this that clients need to specify is
a. Prioritising their goals
b. Only setting long term goals (5+ years)
c. Goals without any measuring capability
d. Having goals specifically relating to retirement for all clients
12. A clients history or past experience with investments will often impact their perception on financial matters
a. True
b. False
13. As part of a financial planning firms privacy policy a client (pick the two correct responses below)
a. Has the right to access any personal information
b. Has no right to access personal information
c. Should have the confidence that their personal information is confidential
d. Does not have any rights to how their personal information is used after disclosing (such as forming part of a distribution list)
14. Which of the following would be considered Best Practice following a client meeting
a. Providing the client with a summary of their goals and current situation
b. Starting the client plan immediately so that it is ready for presentation in the shortest amount of time possible c. Contacting the client following your initial meeting to find out basic information such as their address, employment details etc.
d. Focusing on closed questions so that the conversation remains focused
15. Which of the following two areas can a limited advice/scoped plan lead to unintended consequences later on?
a. Tax and estate planning
b. Superannuation and current income
c. Investment planning and current expenses
d. Legal and accounting issues
16. A financial adviser often works closely with other professional practitioners such as
a. Accountants & solicitors
b. Janitors & barristers
c. Politicians & barristers
d. Doctors & surgeons
17. A client who has a 100% growth investment risk tolerance who is advised to invest in a diversified growth fund is likely to have exposure to:
a. Share and property
b. Shares, property and bonds
c. Share, property and alternative assets
d. Property and bonds
18. If a client’s advice document shows their unlikely to achieve their desired lifestyle in retirement and they are a conservative investor according to their risk profile. They could
a. Choose to maintain the conservative asset allocation and be prepared to settle for a lower consumption lifestyle in retirement
b. Choose to take on a higher growth orientated allocation and in doing so target the desired lifestyle in retirement as long as they fully understand and are accept the likely increase in portfolio volatility
c. Either response is possible
19. Most Australian’s are have which type of investor profile
a. Cautious (40% growth) b. Balanced (70% growth)
c. Moderately aggressive (85% growth)
d. Aggressive (100% growth)
20. What is the acronym advisers should keep in mind when documenting a client’s goals?
a. SMART
b. KMART
c. SMITHS
d. SOAFSCG
FNSFPL508A Conduct complex financial planning research
1. If the information provided by a prospective client is inaccurate or incomplete it could affect the planners ability to properly analyse the client’s needs, objectives and financial situation. It is best practice for the adviser to:
a. Base the advice on the information provided without verifying
b. Request and contact references to ensure the prospective client is trustworthy
c. Ask the client to confirm in writing that, to the best of their knowledge, the information provided is accurate and complete
d. Contact the prospective clients employer to verify their pay details, annual & sick leave entitlements
2. An effective way to ensure the information provided during the fact find stage by the client is accurate is to:
a. Ask for copies of statements so figures can be verified
b. Ask the prospective client if they are telling the truth
c. Do further calculations once the advice document has been presented
d. Ask for the prospective client to complete an integrity multiple choice test
3. Which two of the following are correct
a. Research should be focused on helping client to achieve their goal(s)
b. A financial adviser needs to document/file note the research undertaken
c. A financial adviser does not need to document/file note the research undertaken as this is covered in the Statement of Advice (SOA)
d. Research needs to consider all available products on the market 4. When going through the financial planning process from initial meeting right through to implementation it is imperative the adviser has a structure in place to ensure the necessary steps at each stage are completed and file noted/recorded
a. True
b. False
5. Dealer group technical support, independent research organisations and fellow financial planners within your organisation
a. Are all viable sources of information when exploring research strategies
b. Shouldn’t be accessed due to potential confidentiality/privacy issues
c. Can only be used if the client has given their written permission even for high level conversations
d. Are only to be conducted when the client is present
6. A wide range of information sources to develop research strategies could include
a. Internet, industry publications, senior staff at your firm
b. Internet, family, friends
c. Industry publications, family, friends
d. Senior staff, industry publications, fictional books
7. When explaining the various asset allocation options it would be considered best practice to show the client
a. The returns of various markets and portfolio allocations over decades
b. The returns of various markets and portfolio allocations over the past 12 months
c. The returns of various markets and portfolio allocations over the past 24 months
d. Nothing to do with past returns as they cannot be used to provide a guide to future returns
8. Taking a long term perspective it is fair to say that overtime growth assets (share market and property) outperform defensive assets (cash and bonds)
a. True
b. False
9. When assessing possible strategies it is imperative to look at the likely risk and return of each strategy and to be conscious of
a. The probability and impact of black swan events b. The licensee’s recommended asset allocations for the clients risk profile
c. The expected outcome and whether this meets the clients goals
d. All of the above
10. After assessing a particular strategy the likely outcome is that the risks are very similar to the benefits in terms of potential financial gain/loss. Based on this do you consider
a. It to be worthwhile proceeding based on the 50/50 expected probability
b. It not worthwhile recommending this particular strategy
c. It may be worthwhile depending on what the client thinks
d. It may be worthwhile depending on your financial gain
11. When conducting research, documenting the results, summarising and prioritising the findings the outcomes should be evaluated against
a. Client requirements
b. Your individual requirements
c. Your personal experience
d. Your client’s past experience
12. The purpose of conducting and documenting research is
a. To have a written record of how you derived at the recommendation for your own reference, the clients reference (if ever requested) and regulatory bodies if audited
b. To have confidence in your advice, as you may have several files open at once, so that you are acting in the clients best interest
c. To be able to illustrate that as a financial planner your advice varies across clients
d. All of the above
13. A good way to ensure a financial planner complies with company policy, industry codes of practice and relevant legislation is to use
a. A comprehensive check list or lists
b. Work on files with a colleague
c. Discuss client files when at home with your partner
d. Do everything by hand and avoid the use of computers
14. The Government body that advisers are ultimately responsible to and has the power to ban/fine advisers is: a. ASIC
b. APRA
c. ATO
d. FPA
15. The client best interest duty has been replaced by the reasonable basis for advice requirements
a. True
b. False
16. At which stage of the financial advising process is the scope of advice agreed upon?
a. Information gathering (fact find)
b. Assessing financial situation
c. Plan presentation
d. Implementation
17. The range statement clearly articulates what will be included in the advice document and what won’t be
a. True
b. False
18. A financial plan covering superannuation, salary sacrifice and insurance strategies is considered to be a
a. Limited/scoped advice plan
b. Comprehensive/Holistic plan
c. Partial advice plan
d. Statement of Recommendations (SOR)
19. When carrying out modelling during the strategy research stage which type of software would it help most to be proficient in
a. Publication software
b. Database software
c. Spreadsheet software
d. Graphics software 20. What would be considered best practice in keeping a second copy of client files
a. On a server based in the secure office premises
b. On a remote server (away from the office location)
c. On your home computer
d. No need as long as your computer is < 2 years old
FNSFPL604A Develop complex and innovative financial planning strategies (20)
1. When developing a complex financial plan strategy research results should be
a. Reviewed and compared to client requirements and expectations
b. Proceeded with based on which ever provides the greatest financial gain
c. Viewed individually (not looking at other areas) with the benefits/consequences evaluated in isolation
d. Product driven as comprehensive advice can always be structured using a few specific financial products
2. Having an overview of a client’s financial situation will enable the planner to further analyse to determine opportunities and constraints
a. True
b. False
3. When developing a complex and innovative financial plan it is important the adviser be conscious of the market parameters used for asset growth/income and risk analysis to ensure consistency when comparing strategies
a. True
b. False
4. Which of the following areas deals with how ones assets are managed upon their passing or loss of independence?
a. Estate planning
b. Investment planning
c. Superannuation planning
d. Tax minimisation planning
5. An example of a key economic assumption a. The client will receive a pay rise of 3.5% pa
b. The client’s expenditure will increase by 2.5%pa
c. The rate of inflation is (CPI) 2.5%pa
d. The Australian share market return is factored at 9.5% pa
6. Future personal tax rates in modelling involve assumptions which are usually based on
a. Current tax rates as future financial year tax rates are usually not legislated far in advance
b. The average rate over the past 3 financial years
c. The age and gender of the client
d. The balance of the client’s superannuation account
7. When developing a complex and innovative financial plan an example of a strategic assumption that needs to be documented in all superannuation SOA’s is
a. Superannuation earnings taxed at 15%
b. Asian emerging markets are expected to outperform European industrial shares
c. The Australian Dollar will appreciate in value at 5% pa
d. Bonds outperform shares overtime
8. Part of the process in developing a complex financial plan is to look into the feasible strategic options available. This involves developing
a. An action plan on strategies to achieve client goals
b. Strategies focused on achieving lower priority goals only
c. A plan on how to best achieve tax avoidance
d. Creating a white paper on all of the strategies available in financial planning
9. Once the Fact Find is complete it is the advisers responsibility to research and
a. Analyse and model feasible options and prioritise
b. Only consider one alternative strategy
c. Share the Fact Find with other external planner friends to gain their insights
d. Provide the client with in-depth modelling/explanation in advice document (SOA) for each strategy considered 10. It would be considered Best Practice to develop pros and cons for each strategy considered and record on file a summary of each
a. True
b. False
11. Which of the following statements is incorrect?
a. Where required other professionals will need to be contacted and their thoughts considered in the advice (to understand potential outcomes)
b. Financial advisers and accountants often work closely
c. Financial advisers and legal professionals often work closely
d. Financial advisers commonly work in isolation for the entire financial planning process to avoid privacy issues
12. Best practice for complex and innovative plans such as debt recycling require planners to develop Statement of Advice documents without the need for ongoing reviews
a. True
b. False
13. Under the Corporations Act (2001) financial advisers must practice ethical behaviour by
a. Disclosing conflicts of interest
b. Disclosing any discount received on purchasing their new car
c. Disclosing client fees in percentage terms only
d. Disclosing how many hours per week they work
14. Suitable mode of presentation could include which of the following
a. Telephone
b. Internet video chat
c. Face to face meeting
d. All of these
15. A clear way to communicate when a client requires further professional advice (e.g. accountant) is
a. By providing in writing in SOA
b. By communicating verbally c. By providing in writing in SOA and communicating verbally
d. By providing via email
16. Following the presentation of a Statement of Advice (SOA) the adviser is required to document in a file note
a. Any issues or concerns raised by the client and how they were addressed
b. The date and time of the presentation
c. The location where the presentation took place
d. All of these
17. Wayne, 60 years of age, has $100,000 in his super fund with $10,000 tax free and $90,000 taxable component. Wayne retired on 30th June last financial year. As Wayne’s adviser you recognise the opportunity to participate in the superannuation re-contribution strategy and
a. He can benefit from the strategy as it will reduce the tax he has to pay on income drawn down should he wish to commence an account based pension
b. He can minimise the tax his adult children (beneficiaries) would have to pay
c. He cannot participate in the strategy until he reaches age preservation age of 65
d. All of these
18. The transition to retirement strategy means that for a person between the age of 55-59 they can potentially
a. Receive the same level of disposable income and divert some of the money they currently pay to the ATO to sit inside their super
b. Receive their pension income tax free depending on their assessable income and tax free proportion within the fund
c. Build their retirement savings tax effectively
d. All of these
19. The debt recycling strategy aims to pay off a client’s home loan in a shorter time frame through investing in growth assets. If the current interest rate is 6.00% pa and a client is in the 32.5% tax bracket (ignoring Medicare levy) then the client would need to receive a net return of (choose from below) for them to be in a better position that placing the money into their loan account
a. 6.00%
b. 7.50%
c. 8.89% d. 12.00%
20. When a SMSF wishes to borrow funds to purchase a property what is the function of a bare trust?
a. The purpose of the bare trust is to ensure the bank does not hold title over the property being loaned the money
b. The purpose of the bare trust is if for whatever reason the loan repayments are defaulted upon then the other assets in the SMSF cannot be used to pay back any debts.
c. The purpose of the bare trust is to help individuals to purchase a property using their SMSF so that they can use the property for personal us as long as it is for less than 4 weeks per annum
d. The purpose of the bare trust is to create a way for the SMSF to build its exposure to property whilst relaxing some of the more stringent requirements placed on trustees
FNSFPL605A Present and negotiate complex and innovative financial plans (20)
1. During the presentation of a complex and innovative financial plan the adviser is required to disclose their capacity to client. This means
a. The adviser clearly communicates with the client what services they are able to provide and what services they will need to seek from other qualified professionals
b. The adviser clearly explains to the client the fees associated with the recommended products and services in the financial plan
c. The adviser confirms the clients position has not changed since the Fact Find meeting
d. The adviser clearly discusses with the client the benefits from the recommendations
2. Any client concerns identified during the presentation of a complex and innovative plan
a. Needs to be file noted with the concern detailed, the advisers response and the outcome
b. Is to be addressed during the advice presentation and no further compliance is required
c. Falls outside the scope of the advice and therefore doesn’t need to be addressed/documented
d. None of these
3. Which of the following is not an example of jargon language a. The SOA is yours to keep
b. The PDS will be provided to you shortly
c. The strategy I have recommended is TTR
d. They are all examples of jargon language
4. The purpose of the SOA is
a. To empower the client so they are in an informed position so they can make an educated decision on how they wish to proceed with the financial plan
b. To provide the client with advice on what you would do if you were in their situation
c. To provide the client with an overview of your licensee, who you are, your qualifications, complaints handling procedure and how you can charge for your advice
d. None of these
5. The main focus of the SOA and SOA presentation is to
a. Demonstrate to the client how their needs/objectives have been addressed/achieved out the likely outcome and how this places them in a better position than they are today
b. Provide detailed information on the recommended products including the specific investment options available and their associated costs and how this places them in a better position than they are today
c. First detail the recommended products and then detail how these can provide the client with a successful strategy and how this places them in a better position than they are today
d. None of these
6. When presenting a complex and innovative financial plan it is important that the client has a solid grasp of the recommended strategies
a. True
b. False
7. All assumptions used in the Statement of Advice (SOA) when presenting the plan need to be disclosed to the client
a. True
b. False
8. An important part of presenting a complex and innovative plan to a client is they a. Understand the impact of recommendations discussed
b. Are able to explain back to you in full the recommended strategies and how they work
c. Make a decision at the presentation meeting so that the adviser can commence the implementation process straight away
d. The client has read the Product Disclosure Statements (PDS) in entirety
9. With the implementation of a complex and innovative plan the actions required usually are all to do by the financial planner
a. True
b. False
10. Which of the following sections of an SOA do not have to be presented in detail
a. Fees, charges & commissions
b. The clients goals & objectives
c. The assumptions used in the advice document
d. All of these
11. The commercial relationships of an authorised representative and their organisation do not need to be disclosed when presenting a complex and innovative financial plan where commission will be received by a partnering firm
a. True
b. False
12. An example of a planner identifying and addressing an issue that their professional judgement may require further consideration or consultation is
a. In which name (or joint names) an investment account should be held in to determine the best tax position for the debt recycling strategy
b. The time of day the presentation meeting should be as to avoid peak hour traffic
c. If the client proceeds with the advice which upcoming month they will receive remuneration
d. All of these
13. A legislative requirement placed on the adviser is that they have appropriate product knowledge and expertise in order to give financial advice in the scoped areas of advice
a. True b. False
14. When the client wishes to engage a financial planner with ongoing service these do not have to be clearly defined in writing and communicated to the client
a. True
b. False
15. It is a requirement that all Complex and Innovative financial plans at the clients request be made available the details of
a. At least one alternative strategy considered
b. The proposed recommendation product/service costs
c. The clients goals/objectives
d. A statement explaining their investment risk profile
16. An example of a limits imposed by regulatory body is
a. The concessional contribution cap of $25,000 for a 30 year old
b. Lenders mortgage insurance does not need to be paid if the loan to value ratio (LVR) is less than 75%
c. All employers are mandated to pay super guarantee charge (SGC) at a rate of 9.25% irrespective of income/age
d. Borrowing for investment purposes can only take place when the client has 70% or greater invested in defensive assets
17. It is important that communication channels be
a. Maintained across the client, adviser’s office and dealer group when dealing with complaints
b. Closed between the adviser and the complaining client
c. Open but only between the adviser and the complaining client
d. Open only between the product provider and the client to avoid complications
18. Agreement in principle to proceed can be obtained from client by the signing of the
a. Authority to proceed
b. FSCG
c. Only verbally agreement is required
d. None of these 19. Following the presentation of a complex and innovative plan the adviser is required to
a. Records/file note the conversation and outcome
b. Speak with their manager regarding the client meeting
c. Discuss with the product provider how the meeting went
d. Speak with their dealer group regarding the client meeting
20. An example of a relevant documentation that will need to be provided following the presentation of a complex and innovative plan could be
a. An insurance application
b. A super choice form
c. A superannuation pension account application
d. All of these
FNSFPL606A Implement complex and innovative financial plans (20)
1. Special features of client situation are reviewed for implementation implications could include areas such as
a. High asset or income requirement
b. Complex taxation
c. Complex legal issues or complex estate planning issues
d. All of these
2. Once a client agrees with the recommendations in their financial plan the next step is to discuss
a. Explain implementation actions required which are consistent with client needs and priorities
b. Explain implementation actions required and target all actions taking place at once to ensure a speedy implementation process
c. How you will be remunerated for the advice provided
d. Explain which platform you believe will best achieve their goals
3. It is important that the client clearly understands the implementation actions for which they are responsible. An example of a common action is
a. Giving their payroll department a new super choice form for their new superannuation account b. Providing detailed file notes for each stage of the advice process for compliance purposes
c. Sourcing the market for a superannuation platform that is going to best achieve their needs
d. None of these
4. An example of an internal and external documentation is
a. Signed copy of Authority to Proceed (ATP) & investment account application form
b. Insurance application form & investment account application form
c. Signed copy of Authority to Proceed (ATP) & a file note of implementation action
d. Insurance application form & mortgage application form
5. Audit trails and monitoring procedures need to be
a. Clearly documented and understood by advisers/staff
b. Only verbally delivered to advisers when first created
c. Only circulated to administrative staff
d. Displayed in a common area (kitchen) for all staff to view on a daily basis
6. Following the successful implementation of advice a protocol needs to be in place to
a. Ensure fees and charges are obtained
b. Review the client within the first 3 months
c. The new superannuation account application form is completed
d. The adviser asks for referrals from their new client
7. It is best practice to debrief/keep the client informed of implementation progress
a. True
b. False
8. Implementing a complex financial plan sometimes can take
a. Up to one week
b. One to two weeks
c. Less than one month
d. More than a month 9. Which of the following professionals can at times be used to implement a financial plan
a. Lawyer,
b. Mortgage broker
c. Real estate agent
d. All of these
10. Section 945A of the Corporations Act 2001 requires licensees and their advisers to:
. Determine the personal circumstances relevant to the advice being given to the client;
. Make reasonable enquiries in relation to those;
. Having regard to that information, consider and investigate the subject matter of the advice; and
. Ensure that the advice given to the client is appropriate
a. True
b. False
11. Client best interest legislation aims to ensure an adviser
a. Acts in the client’s best interests;
b. Provides advice that is appropriate; and
c. Prioritises the client’s interests in the event of a conflict
d. All of these