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Series 65 · 30% of the exam

Client/Customer Investment Recommendations and Strategies practice questions

10 free Client/Customer Investment Recommendations and Strategies questions for the Uniform Investment Adviser Law Exam (Series 65) exam, each with the correct answer and an explanation for every option.

Start the questionsFree 10-question Series 65 quiz

What this domain covers

One of the two largest Series 65 domains: matching investments and strategies to a client's profile, including portfolio management, taxation, retirement planning and measuring performance.

Exam weight
30%
On a real exam
≈ 42 questions
In our bank
179 questions

Topics that come up most

  • Client profiling: objectives, risk tolerance and time horizon
  • Portfolio management styles and asset allocation
  • Tax treatment of investments and accounts
  • Retirement plans, ERISA and IRAs
  • Performance measures such as Sharpe ratio and time-weighted return

How to study it

Practise with short client profiles and decide the suitable recommendation before reading the options; the answer usually turns on one detail such as age, liquidity need or tax bracket.

Sample Client/Customer Investment Recommendations and Strategies questions

Try each one before opening the answer. Original questions written to the official exam objectives.

  1. Question 1

    A self-employed consultant with no employees wants to save as much as possible for retirement by making both employee salary deferrals and employer contributions to one plan. Which plan best fits this goal?

    • AA one-participant (solo) 401(k) plan
    • BA SEP IRA set up through the consulting business
    • CA traditional IRA funded with annual contributions
    • DA nonqualified deferred variable annuity
    Show answer and explanation

    Answer: A) A one-participant (solo) 401(k) plan

    A one-participant (solo) 401(k) lets a business owner with no employees contribute both as the employee (elective deferrals) and as the employer (nonelective contributions), whereas a SEP allows only employer contributions.

    • ACorrect. The IRS says a one-participant 401(k) lets the owner make employee elective deferrals and also employer nonelective contributions of up to 25% of compensation, subject to the overall limit.
    • BIncorrect. A SEP is funded only by employer contributions. Elective employee deferrals are not allowed, so it cannot provide both types of contributions.
    • CIncorrect. A traditional IRA is an individual account with a much lower annual limit and no employer-contribution feature.
    • DIncorrect. A nonqualified annuity is bought with after-tax money and is not an employer plan, so there are no employee deferrals or employer contributions.

  2. Question 2

    A client has $10,000 of net capital losses this year and no gains. How much can offset ordinary income this year, and what happens to the rest?

    • A$3,000 this year; the remaining $7,000 carries forward
    • B$10,000 this year, with nothing carried forward
    • C$0 this year; the full $10,000 is lost
    • D$5,000 this year, with the rest lost
    Show answer and explanation

    Answer: A) $3,000 this year; the remaining $7,000 carries forward

    • ACorrect. Losses carry forward indefinitely.
    • BIncorrect. The annual limit is $3,000.
    • CIncorrect. The losses carry forward.
    • DIncorrect. That isn't the rule.

  3. Question 3

    A retiree keeps 2 years of spending in cash and the rest invested for growth. This is:

    • ALeverage
    • BMarket timing
    • CChurning
    • DBucketing
    Show answer and explanation

    Answer: D) Bucketing

    • AIncorrect. No borrowing is used.
    • BIncorrect. It is liquidity planning.
    • CIncorrect. It serves the client.
    • DCorrect. Near-term needs are kept liquid.

  4. Question 4

    A client sells a fund at a loss and wants to stay invested without triggering the wash sale rule. A common approach is to:

    • ABuy the same fund in an IRA right away
    • BBuy back the same fund the next day at a lower price
    • CBuy a similar but not substantially identical fund
    • DHold cash for 10 days, then buy the same fund
    Show answer and explanation

    Answer: C) Buy a similar but not substantially identical fund

    • AIncorrect. That can also be a wash sale.
    • BIncorrect. That's a wash sale.
    • CCorrect. The client keeps market exposure.
    • DIncorrect. The window is 30 days.

  5. Question 5

    A client with a modest estate wants their brokerage account to pass directly to a child and avoid probate. A simple option is:

    • AA margin agreement
    • BHolding the account as tenants in common with a stranger
    • CA transfer on death (TOD) registration
    • DA Coverdell ESA
    Show answer and explanation

    Answer: C) A transfer on death (TOD) registration

    • AIncorrect. That doesn't affect inheritance.
    • BIncorrect. That doesn't fit.
    • CCorrect. Assets pass to the named beneficiary.
    • DIncorrect. That's for education.

  6. Question 6

    An investor in the 35% federal bracket has both a taxable brokerage account and a traditional IRA. He wants to add two holdings: a publicly traded equity REIT and a broad U.S. stock index fund whose dividends are mostly qualified. From an asset-location standpoint, which placement is generally the most tax-efficient?

    • AHold the REIT in the IRA and the stock index fund in the taxable account
    • BHold the REIT in the taxable account and the index fund in the IRA, since REIT dividends get the qualified rate
    • CHold both in the taxable account, because REIT distributions are treated mainly as tax-free return of capital
    • DHold both in the IRA, because traditional IRA withdrawals are taxed at long-term capital gains rates
    Show answer and explanation

    Answer: A) Hold the REIT in the IRA and the stock index fund in the taxable account

    Most REIT dividends are taxed as ordinary income rather than at qualified-dividend rates, so REITs are generally best placed in tax-advantaged accounts. Investments that produce qualified dividends and long-term gains are better kept in taxable accounts, where they get the lower rates.

    • ACorrect. Most REIT distributions are not qualified dividends and are taxed at ordinary income rates, so sheltering them in the IRA saves the most tax. The index fund's qualified dividends and long-term gains get preferential rates in the taxable account.
    • BIncorrect. REIT dividends are generally not qualified dividends. Holding the REIT in the taxable account exposes them to ordinary income rates, and putting the index fund in the IRA wastes its preferential treatment.
    • CIncorrect. Part of a REIT's distribution can be return of capital, but most REIT dividends are taxable as ordinary income. This placement leaves that income unsheltered.
    • DIncorrect. Traditional IRA withdrawals are taxed as ordinary income. Holding the index fund in the IRA would turn qualified dividends and capital gains into ordinary income when withdrawn.

  7. Question 7

    In investment analysis, the 'risk-free rate' is usually represented by the yield on:

    • ACorporate bonds
    • BJunk bonds
    • CS&P 500 stocks
    • DT-bills
    Show answer and explanation

    Answer: D) T-bills

    • AIncorrect. They carry credit risk.
    • BIncorrect. Those are risky.
    • CIncorrect. Those are risky.
    • DCorrect. Short-term Treasuries proxy the risk-free rate.

  8. Question 8

    A client's job loss and new medical costs mean the adviser should:

    • AClose the account
    • BChange nothing
    • CAdd more risk
    • DUpdate the profile
    Show answer and explanation

    Answer: D) Update the profile

    • AIncorrect. Review comes first.
    • BIncorrect. The profile changed.
    • CIncorrect. Needs have changed.
    • DCorrect. Recommendations must reflect current circumstances.

  9. Question 9

    A healthy client who can afford to wait asks about claiming Social Security. Delaying past full retirement age generally:

    • AHas no effect on the benefit, which is fixed at full retirement age
    • BReduces the benefit permanently
    • CIncreases the monthly benefit until age 70
    • DEnds eligibility for Medicare
    Show answer and explanation

    Answer: C) Increases the monthly benefit until age 70

    • AIncorrect. It increases it.
    • BIncorrect. It increases it.
    • CCorrect. Delayed retirement credits build up.
    • DIncorrect. That isn't true.

  10. Question 10

    A high earner has already maxed out a 401(k) and IRA and wants more tax-deferred growth. A suitable option to consider is:

    • AA margin account
    • BA Coverdell ESA for themselves
    • CA municipal bond fund held in an IRA
    • DA low-cost deferred annuity
    Show answer and explanation

    Answer: D) A low-cost deferred annuity

    • AIncorrect. That doesn't defer taxes.
    • BIncorrect. That's for education.
    • CIncorrect. The tax benefit is wasted.
    • DCorrect. It offers tax deferral without contribution limits.

Client/Customer Investment Recommendations and Strategies: FAQs

How much of the Series 65 exam is Client/Customer Investment Recommendations and Strategies?

Client/Customer Investment Recommendations and Strategies is 30% of the Series 65 exam by the official exam guide's weighting, which on a 140-question form works out to roughly 42 questions. The real exam's exact split varies by form.

What does the Client/Customer Investment Recommendations and Strategies domain cover?

One of the two largest Series 65 domains: matching investments and strategies to a client's profile, including portfolio management, taxation, retirement planning and measuring performance.

How should I study Client/Customer Investment Recommendations and Strategies for Series 65?

Practise with short client profiles and decide the suitable recommendation before reading the options; the answer usually turns on one detail such as age, liquidity need or tax bracket.

Where can I practise more Client/Customer Investment Recommendations and Strategies questions?

This page has 10 free Client/Customer Investment Recommendations and Strategies questions with answers. The ExamWize Series 65 question bank has 179 questions in this domain. Every practice exam result breaks your score down by domain, and Review Mode re-drills the questions you missed.

Other Series 65 topics

Also: 15 free questions across all topics, the Series 65 cheat sheet and the study guide.

Get Client/Customer Investment Recommendations and Strategies exam-ready

The full Series 65 bank has 179 Client/Customer Investment Recommendations and Strategies questions. Timed practice exams match the real exam's length and domain weights, every result shows your score per domain, and Review Mode re-drills the questions you missed.

See the full Series 65 practice examsTake the free diagnostic

Not affiliated with NASAA; questions are original, written from the official exam outline, and never copied from the real exam.