CFP (Certified Financial Planner) Practice Questions Practice Test
Frequently asked questions
How many CFP (Certified Financial Planner) Practice Questions practice questions are here?+
A full bank of original CFP (Certified Financial Planner) Practice Questions practice questions across the official content areas, weighted like the real exam, with explanations. Free, no signup.
What is the CFP (Certified Financial Planner) Practice Questions exam like?+
A multiple-choice exam. Practice by topic here, then take the full timed mock exam to gauge readiness.
Are these the real exam questions?+
No. Every question is 100% original, written from public primary sources with explanations. We never copy real exam questions or paid prep material.
Can I study in Chinese or Spanish?+
PrepPass practice is in English, 中文 and Español. The official exam is in English — switch the question language to English any time to rehearse the exact terminology you'll see on test day.
Sample practice questions
A few real questions from this free bank, with full explanations. Use the practice tool above for the whole set.
- 1. Planning Process & Professional Conduct
A CFP professional providing financial advice must act as a:
- a.Salesperson maximizing commissions
- b.Regulator
- c.Fiduciary acting in the client's best interest
- d.Neutral party with no duty
Answer: c
Explanation: CFP professionals owe a fiduciary duty to act in the client's best interest.
- 2. Planning Process & Professional Conduct
An emergency fund is generally recommended to cover:
- a.Retirement entirely
- b.Several months of living expenses
- c.Only luxury purchases
- d.One day of expenses
Answer: b
Explanation: An emergency fund typically holds several months of expenses in liquid savings.
- 3. Risk Management & Insurance
The primary purpose of life insurance is to:
- a.Avoid all taxes
- b.Guarantee stock gains
- c.Replace income or provide for dependents on death
- d.Build the largest possible investment
Answer: c
Explanation: Life insurance provides financial protection for dependents upon the insured's death.
- 4. Risk Management & Insurance
Insurance fundamentally works by:
- a.Eliminating all risk
- b.Pooling and transferring risk among many policyholders
- c.Guaranteeing profit
- d.Investing in stocks only
Answer: b
Explanation: Insurance pools risk across many, transferring individual risk to the insurer.
- 5. Investment Planning
Asset allocation refers to:
- a.Avoiding all risk
- b.Dividing a portfolio among asset classes like stocks, bonds, and cash
- c.Picking a single stock
- d.Timing the market daily
Answer: b
Explanation: Asset allocation spreads investments across asset classes to balance risk and return.
- 6. Investment Planning
Dollar-cost averaging means:
- a.Investing a lump sum once
- b.Investing a fixed amount at regular intervals
- c.Buying only at market lows
- d.Selling everything yearly
Answer: b
Explanation: Dollar-cost averaging invests fixed amounts periodically, smoothing purchase prices.
- 7. Tax & Retirement Planning
The power of compounding rewards investors who:
- a.Start saving and investing early
- b.Withdraw frequently
- c.Avoid all growth assets
- d.Wait until retirement to start
Answer: a
Explanation: Starting early gives returns more time to compound.
- 8. Tax & Retirement Planning
A key retirement-planning risk is longevity risk, which is the risk of:
- a.Dying too early
- b.Paying off a mortgage
- c.Outliving one's savings
- d.Markets rising
Answer: c
Explanation: Longevity risk is outliving one's assets in retirement.
- 9. Estate Planning
A will primarily:
- a.Manages assets while alive only
- b.Avoids all taxes automatically
- c.Replaces insurance
- d.Directs how a person's assets are distributed after death
Answer: d
Explanation: A will specifies distribution of assets and can name guardians and an executor.
- 10. Estate Planning
Probate is:
- a.An insurance policy
- b.A tax rate
- c.A type of trust
- d.The legal process of validating a will and settling an estate
Answer: d
Explanation: Probate is the court process of administering a deceased person's estate.