CFP Financial Planner Practice Test
Free · 140 Questions.

Question 1

Under the FP Canada Standards of Professional Responsibility, which of the following best defines the Duty of Loyalty owed by a CFP professional to a client?

• A. Act as an unpaid estate executor without charging professional fees.
• B. Place client interests first and properly disclose and manage conflicts.
• C. Guarantee that client portfolios achieve agreed benchmark returns.
• D. Offer only proprietary financial products created by their employer, even when cheaper alternatives exist.

Explanation: Principle 1 (Duty of Loyalty) requires a Certificant to place the client's interests ahead of their own and all other interests, to disclose conflicts of interest, and to mitigate conflicts in the client's favour.

Question 2

Under the FP Canada Practice Standards, what does Practice Standard PS.2 ("Define the Terms of the Engagement") require of the planner?

• A. Present the final recommendations and obtain the client's decision on them.
• B. Work with the client to define the scope, the services and each party's roles.
• C. Gather qualitative and quantitative client information before agreeing on any scope.
• D. Analyze the client's current financial situation and cash flows.

Explanation: PS.2 requires the planner to work collaboratively with the client to define and agree on the scope of the engagement and the services to be provided, including the planner's and client's roles and responsibilities. A formal Terms of Engagement document is considered best practice.

Question 3

A CFP professional discovers that their corporate client is actively engaging in fraudulent invoice factoring. What is the planner's obligation regarding client confidentiality under FP Canada rules?

• A. Keep it confidential unless the client consents in writing or legal process requires disclosure.
• B. Alert the firm's other clients who have business dealings with the company involved, so they can protect themselves.
• C. Take direct management control of the corporate client's operating bank accounts until the fraud is resolved.
• D. Publish the full transaction details to regional regulators and the media.

Explanation: Rule 31 prohibits disclosing or using confidential client information without the client's written and informed consent, unless it is in response to proper legal, statutory or regulatory process. The duty of confidentiality survives the end of the engagement.

Question 4

Under Rule 10 of the FP Canada Rules of Conduct, what must a Certificant do if they accept an appointment as estate trustee or power of attorney for property for a client who is not an immediate family member?

• A. Advise the client in writing that they can no longer provide planning advice or services.
• B. Disclose the appointment in the engagement letter and continue the planning services as before.
• C. Obtain the client's written consent and keep serving as both planner and trustee.
• D. Accept after FP Canada has approved the appointment in writing and the client has consented.

Explanation: Rule 10 prohibits a Certificant from acting as estate trustee or executor, acting as power of attorney for property, or knowingly being named beneficiary for a client while providing financial planning services. If a Certificant accepts such a role for a client who is not an immediate family member, they must advise the client in writing that they can no longer provide financial planning advice or services.

Question 5

If a CFP professional receives a referral fee from a mortgage broker for referring a financial planning client, what do the FP Canada Rules of Conduct require?

• A. Immediately surrender the CFP certification to FP Canada.
• B. Disclose the referral fee to the client in writing, with any conflict it creates.
• C. Deposit the referral fee into an escrow trust account for five years.
• D. End the client relationship and refer all of the client's business to another planner.

Explanation: Rule 7(g) requires a Certificant to disclose in writing any contingency or referral fees received in relation to services provided to the client; the guidance to Rule 27 repeats that all sources of compensation, including referral fees, must be disclosed. Rule 8 adds written disclosure and consent where a conflict of interest exists.