Choose wisely. There is only one correct answer to each question.
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1.
What is included in an ADV form?
The advisor's resume. The ADV form includes advisors' educational backgrounds and professional designations. It also discusses how the advisor is compensated, and whether he or she has ties to particular insurance or mutual fund companies.
2.
To determine how profitable a company is, examine its _______.
Return on assets. Return on assets, or ROA, is a key measure of how well a company uses investors' money.
3.
What kind of organizations would you consult to find out whether a prospective financial advisor has ever been subjected to disciplinary action?
Regulatory organizations. Regulatory organizations--whether professional or governmental--can tell you whether your candidate has ever been disciplined.
4.
To determine how profitable a company is, you can examine its cash flow.
False. Cash flow does not tell you much about profitability. The metric you want is return on assets, which measures how well a company uses investors' money.
5.
What should we do when we go through a new life stage?
Re-evaluate our financial plans. Our financial plans may or may not need to change. But one thing we must do is re-evaluate those plans--otherwise, we won't know whether they need to change at all.
