Certified Financial Planner (CFP) Exam 2026 – 400 Free Practice Questions to Pass the Exam

The correct answer is found in the step where Joe conducts an analysis of the client's current financial status and evaluates potential alternatives. Preparing financial statements and conducting ratio analysis are crucial activities that help the financial planner assess the client’s financial health and situation. This step involves examining quantitative data to determine how the current financial decisions align with the client’s goals and aspirations.

By evaluating the client's financial statements, Joe is able to identify trends, performance issues, and areas that may require changes. The ratio analysis provides insights into liquidity, profitability, and solvency, facilitating a thorough understanding of the client's financial position. This comprehensive analysis lays the groundwork for determining whether the current course of action is effective or if adjustments are needed, thereby guiding the planner in proposing informed recommendations for the client’s financial future.