Practice Test GeeksCFP - Certified Financial Planner Practice Test
← All CFP Flashcard Decks

Regulatory Frameworks & Compliance Flashcards

7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Regulatory Frameworks & Compliance flashcards as text

  1. Under the Investment Advisers Act of 1940, which AUM threshold generally requires an investment adviser to register with the SEC rather than state regulators?

    Answer: $100 million

    Advisers managing $100 million or more in AUM are generally required to register with the SEC rather than state securities regulators.

  2. The Employee Retirement Income Security Act (ERISA) Section 404(c) protects plan fiduciaries from liability when which condition is met?

    Answer: The plan offers at least three diversified investment options and participants exercise control

    ERISA 404(c) shields fiduciaries when the plan offers at least three diversified options, provides sufficient information, and participants exercise independent control over their accounts.

  3. A CFP® professional who becomes aware that a client's tax return contains a material error is required to do which of the following under CFP Board's Code of Ethics?

    Answer: Inform the client of the error and recommend they take corrective action

    CFP Board's Standards require the professional to promptly notify the client of the error and recommend corrective action, while respecting client confidentiality.

  4. Which rule under the Securities Exchange Act of 1934 prohibits corporate insiders from profiting on short-swing transactions in their company's securities?

    Answer: Section 16(b)

    Section 16(b) requires insiders to disgorge profits from any purchase and sale (or sale and purchase) of their company's equity securities within a six-month period.

  5. Under Regulation Best Interest (Reg BI), a broker-dealer must act in the best interest of a retail customer at the time of a recommendation without primarily considering:

    Answer: The financial interests of the broker-dealer or its associated persons

    Reg BI requires broker-dealers to put retail customer interests first and prohibits placing the firm's or associated person's financial interests ahead of the customer's.

  6. The USA PATRIOT Act requires financial institutions to implement Customer Identification Programs (CIP) primarily to combat which risk?

    Answer: Money laundering and terrorist financing

    CIP requirements under the USA PATRIOT Act were enacted to help detect and deter money laundering and the financing of terrorist activities.

  7. Under FINRA Rule 4512, member firms must update customer account information for non-institutional customers at a minimum of how often?

    Answer: Every 36 months

    FINRA Rule 4512 requires member firms to review and update essential customer account information at least every 36 months.