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Free CSI Applied Financial Planning Certification Examination — AFP Exam 1 Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the CSI Applied Financial Planning Certification Examination — AFP Exam 1 practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1A PFP planner is asked to advise on a specialized transaction beyond her competence. The client wants her personal recommendation today. Which response follows the PFP Code of Ethics?

    1. A.Give a recommendation supported by her general experience.
    2. B.Act within her competence and seek appropriate support.Correct answer: B
    3. C.Proceed after the client accepts the risk of an error.
    4. D.Recommend the option with the lowest initial charge.

    Explanation: The source states: "Act only within the confines of your own competence and when appropriate, seek additional support." Client consent or low cost does not create competence. Appropriate support addresses the limitation before advice is given.

    Reference: PFP® Code of Ethics — Professional Conduct & Governance — Code of Ethics, 2.2

  2. 2At an introductory meeting, a new client is hesitant because previous advisers dismissed her concerns. Which approach most directly helps establish rapport?

    1. A.Ask about her concerns and agree how the two of you will work together.Correct answer: A
    2. B.Begin with the firm's standard product selection before discussing her concerns.
    3. C.Use the meeting to demonstrate technical expertise without inviting questions.
    4. D.Assume her financial priorities match those of clients in her age group.

    Explanation: The profile requires: "Build rapport and maintain a relationship with a diverse group of clients" Inviting her perspective and establishing a working relationship builds rapport. A product-first approach, one-way technical presentation, and demographic assumptions do not address her stated difficulty.

    Reference: 2022 PFP® Professional Competency Profile — p. 6, competency 2.1

  3. 3A client chooses an emergency-fund goal equal to three months of essential living expenses. Those expenses total $2,800 per month. Ignoring interest, what minimum fund balance meets this specific goal?

    1. A.$2,800
    2. B.$8,400Correct answer: B
    3. C.$11,200
    4. D.$16,800

    Explanation: FCAC advises: "Your emergency fund should provide you with enough money to cover your living expenses for 3 to 6 months." The client has selected the three-month target; this is a planning choice, not a legal minimum. The minimum balance for that target is $2,800 × 3 = $8,400. $2,800 covers one month; $11,200 covers four; $16,800 covers six. Larger balances exceed, rather than equal, the minimum needed for this chosen target.

    Reference: FCAC — Making a budget — What to consider before you make a budget — Think about your financial goals

  4. 4A client's plan assumes uninterrupted employment income. An unexpected injury prevents work for several months, and there is no employer income-replacement coverage. What implication should the planner evaluate?

    1. A.The client's employment income assumption remains valid because the injury is temporary.
    2. B.The client's life insurance death benefit becomes payable while the client recovers.
    3. C.The interruption may create a cash-flow gap that the existing plan has not funded.Correct answer: C
    4. D.The emergency reserve can replace earnings indefinitely without reducing its balance.

    Explanation: FCAC states: "It provides protection if you’re unable to work and earn an income." An inability to work threatens the assumed income stream and may create an unfunded gap. Temporary incapacity can affect cash flow, life insurance is not payable simply because of injury, and spending a finite reserve reduces its balance rather than creating indefinite recurring income.

    Reference: FCAC — Disability insurance — Understanding disability insurance

  5. 5A client has owned investments for years, but someone else selected every holding. Which inquiry most directly assesses the client's own investment experience?

    1. A.How much did the largest holding increase in value last year?
    2. B.Which investments have you personally selected or traded, and what decisions did you make?Correct answer: B
    3. C.How much income do you expect to receive after retirement?
    4. D.What percentage of your salary would you like to save next year?

    Explanation: The source states: "Assess the client’s investment knowledge and experience" Personal decisions and transactions reveal direct experience. Performance, retirement income expectations and future saving targets do not establish the client's experience.

    Reference: 2022 PFP® Professional Competency Profile — p. 9, competency 5.1

  6. 6A grandmother is the subscriber of an RESP for her grandson. He receives educational assistance payments while attending a qualifying program. Whose tax return reports the EAPs?

    1. A.The grandmother's, because she made the contributions.
    2. B.The grandson's, because he is the beneficiary receiving the EAPs.Correct answer: B
    3. C.The financial institution's, because it administers the account.
    4. D.Both returns, with half the EAPs reported by each person.

    Explanation: The CRA states: "EAPs are reported on the beneficiary’s tax return" The beneficiary reports the EAPs. The subscriber's contributions and the institution's administrative role do not make them the taxpayer for this payment; there is no automatic 50/50 allocation.

    Reference: CRA — Saving for the future — Understanding registered plans, part 1 — RESP

  7. 7A client wants to be able to buy the same basket of goods and services throughout retirement, despite ongoing inflation. Which income objective expresses that goal?

    1. A.An income amount that rises to preserve its purchasing power.Correct answer: A
    2. B.An unchanged dollar income amount throughout retirement.
    3. C.An income amount that falls as the price level increases.
    4. D.An income amount set without reference to future living costs.

    Explanation: The AMF explains: "If your retirement income is not indexed and does not increase to keep pace with inflation, your purchasing power will decrease over time." The client’s objective concerns real purchasing power, so the income target must rise with the cost of the basket. A fixed or declining nominal amount would buy less as prices rise; ignoring future costs does not express this objective. This uses a general inflation principle, not a Quebec-specific pension entitlement.

    Reference: Autorité des marchés financiers — 4 steps to plan for retirement — 3. Calculate how much you'll need to save each year — Inflation

  8. 8An Ontario client sets a distribution goal for $900,000 remaining after all estate debts, taxes and expenses: $100,000 to charity, with the rest divided equally between two children. What amount does the goal allocate to each child?

    1. A.$450,000
    2. B.$800,000
    3. C.$400,000Correct answer: C
    4. D.$50,000

    Explanation: Ontario explains that a will "explains your wishes about how your property and possessions should be taken care of and distributed, for example, how much money should be paid to a specific person or charity." To quantify this client’s stated distribution goal, first reserve $100,000 for charity: $900,000 − $100,000 = $800,000. Dividing that remainder by two gives $400,000 per child. $450,000 ignores the charitable gift; $800,000 gives one child the whole remainder; $50,000 divides the charitable gift instead of the residue. This is the client’s goal, not an assertion of statutory inheritance shares.

    Reference: Ontario — Estate planning and wills — Wills

  9. 9A PFP planner finds a genuine conflict between an applicable law and the PFP Code of Ethics. Which requirement governs the planner's conduct?

    1. A.The requirement selected by the client.
    2. B.The requirement producing the lower cost.
    3. C.The requirement favoured by the employer.
    4. D.The requirement imposed by the law.Correct answer: D

    Explanation: The source states: "Where there is a conflict between the Code of Ethics and the law, you must abide by the law." The Code expressly establishes legal priority; client, cost and employer preferences cannot replace it.

    Reference: PFP® Code of Ethics — Professional Conduct & Governance — Code of Ethics, 1.1

  10. 10A recently widowed client becomes upset while discussing household finances. Which response demonstrates care and empathy?

    1. A.Complete the interview quickly so the client's distress does not delay the plan.
    2. B.Explain that emotional concerns should be discussed only after recommendations.
    3. C.Acknowledge the loss and offer a pause before continuing at the client's pace.Correct answer: C
    4. D.Change the subject to returns so the client can avoid discussing her concerns.

    Explanation: The profile requires: "Treat the client with utmost care, empathy, and respect" Acknowledging the loss and allowing a pause responds to the client's emotional needs. Rushing, excluding emotions, or changing the subject without consent does not show the same care.

    Reference: 2022 PFP® Professional Competency Profile — p. 6, competency 2.2

Exam Review

About CSI Applied Financial Planning Certification Examination — AFP Exam 1

CSI Applied Financial Planning Certification Examination — AFP Exam 1 · CA

Key exam facts

Provider
Canadian Securities Institute (CSI)
Format
Stand-alone multiple-choice; four options per question; proctored remotely or in person at a test centre.
Exam questions
Total questions: 105.
Time limit
3 hours
Passing score
Scaled score of 60 or greater on a 1–100 scale. The raw passing score is not published.
Exam fee
Official AFP Certification Examination enrolment: $750, plus applicable taxes; this is combined AFP enrolment, not a published separate Exam 1 price. The reviewed enrolment page does not expressly identify the dollar currency; employer discounts may apply.

Topics covered

  • Professional Conduct and Regulatory Compliance (10%)

    • Adhere to the PFP® Code of Ethics
    • Comply with federal and provincial laws and regulations relevant to the profession of a financial planner
    • Maintain knowledge of changes in the political, economic, and regulatory environments
    • Explain the role of a financial planner and the meaning of the PFP® credential
    • Act in the best interest of the client in providing financial planning services
    • Follow through on one’s commitments
    • Demonstrate ethical judgment and behaviour in all situations
    • Treat all individuals in a non-discriminatory manner
    • Disclose potential conflict of interest to maintain the integrity of the professional relationship
    • Protect the confidentiality of the client’s information
    • Explain how the client’s information will be used
    • Deal effectively with the client’s concerns, objections, and complaints
    • Identify the need for referral to prevent practicing outside of the limits of one’s competence
    • Pursue professional development activities to update one’s knowledge and skills

  • Client Relationship and Practice Management (6%)

    • Build rapport and maintain a relationship with a diverse group of clients
    • Treat the client with utmost care, empathy, and respect
    • Manage the client’s expectations regarding financial planning while respecting life situation and financial cycle needs
    • Communicate a value proposition for financial planning services
    • Provide full disclosure of compensation structure and fees associated with financial planning services
    • Converse with the client to discover the client’s goals and objectives
    • Use active listening to fully understand the client’s needs and to confirm understanding
    • Communicate quantitative and qualitative information logically, clearly, and concisely
    • Adapt communication (in-person and virtual) based on the client’s age, needs, and life circumstances
    • Asses the client’s non-verbal behaviour
    • Examine the client’s values, personality, lifestyle, and relationships that may influence financial planning
    • Assist the client in prioritizing short-term and longterm financial goals and objectives
    • Prepare a letter of engagement
    • Maintain the accuracy, relevance, and currency of the client’s documentation for compliance and follow-up purposes
    • Seek feedback on the financial planning experience to implement improvements

  • Asset and Liability Management (11%)

    • Identify the client’s asset and liability management goals and objectives
    • Assess the client’s financial knowledge and experience
    • Identify the client’s attitudes toward debt and spending and saving habits
    • Identify the client’s sources of income and expenses
    • Obtain relevant and accurate information on the client’s personal and business assets, debt, and other liabilities
    • Examine the impact of the client’s personal, family, and work circumstances on financial planning
    • Determine the client’s legal issues that may influence financial planning
    • Prepare personal financial statements
    • Analyze financial statements
    • Create financial projections for future cash flow, net worth, and budget
    • Advise on the features and benefits of credit products and borrowing options
    • Explain the impact of credit standing on the ability to borrow
    • Determine appropriate asset and liability management strategies
    • Analyze advantages and disadvantages of asset and liability management strategies in relation to the client’s goals and objectives
    • Recommend the optimal asset and liability management strategy
    • Implement the recommended asset and liability management strategy as part of the client’s financial plan
    • Periodically review the asset and liability management strategy to determine the need for updates
    • Update the asset and liability management strategy to ensure its relevance to the client’s goals, objectives, and life circumstances

  • Risk Management and Insurance (12%)

    • Evaluate unexpected changes to circumstances and their implications for the client’s financial plan
    • Assess the client’s financial ability to deal with changes to circumstances
    • Identify reasons why the client may need insurance
    • Conduct an insurance needs analysis
    • Explain the features and benefits of insurance products
    • Determine appropriate risk management strategies
    • Analyze advantages and disadvantages of risk management strategies in relation to the client’s goals and objectives
    • Assess tax implications of insurance products and risk management strategies
    • Recommend the optimal risk management strategy
    • Implement the recommended risk management strategy as part of the client’s financial plan
    • Periodically review the risk management strategy to determine the need for updates
    • Update the risk management strategy to ensure its relevance to the client’s goals, objectives, and life circumstances

  • Investment Planning (17%)

    • Assess the client’s investment knowledge and experience
    • Examine the client’s return expectations and time horizon
    • Assess the client’s investment risk tolerance
    • Discuss investment goals and objectives based on the client’s needs and priorities
    • Determine an appropriate asset allocation based on the client’s investment profile
    • Advise on the features and benefits of investment products
    • Analyze statements of investment holdings
    • Calculate risk-adjusted ratios for investments and portfolios
    • Calculate the required rates of return for investments and portfolios to meet the client’s goals and objectives
    • Determine appropriate investment strategies
    • Analyze advantages and disadvantages of investment strategies in relation to the client’s goals and objectives
    • Recommend the optimal investment strategy
    • Implement the recommended investment strategy as part of the client’s financial plan
    • Periodically review the investment portfolio to determine the need for updates
    • Update the investment portfolio to ensure its relevance to the client’s goals, objectives, and life circumstances

  • Tax Planning (14%)

    • Identify parties relevant to the client’s tax situation
    • Identify the taxable nature of assets and liabilities
    • Identify current, deferred, and future tax obligations
    • Analyze implications of different taxation structures
    • Identify deductions, credits, and taxes payable
    • Determine appropriate tax planning strategies
    • Analyze advantages and disadvantages of tax planning strategies in relation to the client’s goals and objectives
    • Recommend the optimal tax planning strategy
    • Implement the recommended tax planning strategy as part of the client’s financial plan
    • Periodically review the tax planning strategy to determine the need for updates
    • Update the tax planning strategy to ensure its relevance to the client’s goals, objectives, and life circumstances

  • Retirement Planning (17%)

    • Determine the client’s retirement goals and objectives
    • Assess the implications of the client’s longevity and healthcare costs for the retirement plan
    • Identify the client’s family dynamics and business ownership that may influence retirement planning
    • Create financial projections based on the client’s current position
    • Conduct a retirement income needs analysis
    • Identify compromises (if any) required to meet the client’s retirement goals and objectives
    • Advise on the features and benefits of retirement accounts
    • Advise on the features and benefits of government benefit plans
    • Determine small business succession strategies for retirement
    • Determine appropriate retirement planning strategies
    • Analyze advantages and disadvantages of retirement planning strategies in relation to the client’s goals and objectives
    • Recommend the optimal retirement planning strategy
    • Implement the recommended retirement planning strategy as part of the client’s financial plan
    • Periodically review the retirement planning strategy to determine the need for updates
    • Update the retirement planning strategy to ensure its relevance to the client’s goals, objectives, and life circumstances

  • Estate Planning (13%)

    • Identify the client’s estate planning goals and objectives
    • Identify the client’s family dynamics and business relationships that may influence estate planning
    • Collect legal documents that have implications for estate planning
    • Advise on the features and benefits of estate planning vehicles
    • Explain different types of the Power of Attorney
    • Assess the liquidity of estate at death
    • Assess the structure of the client’s estate plan and its implications for taxation
    • Assess the needs of beneficiaries
    • Consider the implications of small business ownership on estate planning strategies
    • Determine appropriate estate planning strategies
    • Analyze advantages and disadvantages of estate planning strategies in relation to the client’s goals and objectives
    • Recommend the optimal estate planning strategy
    • Implement the recommended estate planning strategy as part of the client’s financial plan
    • Periodically review the estate planning strategy to determine the need for updates
    • Update the estate planning strategy to ensure its relevance to the client’s goals, objectives, and life circumstances

How to prepare

Work through the topics, read the explanation after each answer, and revisit the areas where you miss questions. Use the official outline and reference materials below to guide your study.

These independent practice questions are not actual exam items and do not guarantee a passing result.

Frequently asked questions

What is the exam format?

Stand-alone multiple-choice; four options per question; proctored remotely or in person at a test centre.

How many questions are on the exam?

Total questions: 105.

How long is the exam?

3 hours

What is the passing score?

Scaled score of 60 or greater on a 1–100 scale. The raw passing score is not published.

How much does the exam cost?

Official AFP Certification Examination enrolment: $750, plus applicable taxes; this is combined AFP enrolment, not a published separate Exam 1 price. The reviewed enrolment page does not expressly identify the dollar currency; employer discounts may apply.

Official sources and references

Confirm current exam arrangements with the exam provider.