Preview Questions Financial Planner | Role Specific Skill

Question 1: In retirement planning, how would you model the risk of outliving retirement savings?

Which action should you take?

Choose only one option

Use a Monte Carlo simulation to simulate various market and withdrawal scenarios

Assume a constant rate of return over the retirement period

Apply the 4% rule to estimate safe withdrawal rates

Ignore this risk as it is negligible for most clients

Question 2: How would you recommend managing the taxation of a client's stock options in their financial plan?

Which action should you take?

Choose only one option

Exercise the options when in a lower tax bracket to minimize taxes

Sell the options immediately to avoid capital gains

Convert options into long-term investments to qualify for favorable tax rates

Hold the options indefinitely to defer taxes

Question 3: What is the primary tax advantage of gifting appreciated stock to a family member in a lower tax bracket?

Which action should you take?

Choose only one option

Avoids estate taxes on the stock

Transfers the appreciation tax-free

Reduces income tax liability on capital gains

Ensures full cost basis for the recipient

Question 4: What is the "safe withdrawal rate" for a retiree in terms of their initial retirement portfolio balance?

Which action should you take?

Choose only one option

5%

4%

6%

3%

Question 5: How should a financial planner address the potential effects of required minimum distributions (RMDs) on a client's retirement plan?

Which action should you take?

Choose only one option

Encourage the client to delay withdrawals for as long as possible

Suggest converting tax-deferred assets to Roth IRAs

Advise on adjusting asset allocation for tax efficiency

Recommend increasing contributions to tax-deferred accounts

Question 6: Which of the following strategies is most effective for reducing estate taxes in the case of a business owner planning to pass the business to heirs?

Which action should you take?

Choose only one option

Lifetime gifting

Charitable lead trust

Sale to an intentionally defective grantor trust (IDGT)

Grantor-retained annuity trust (GRAT)