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
A registered investment adviser charging fees based on a percentage of AUM must deliver Form ADV Part 2A to new clients no later than:
Answer: At the time of or before entering into an advisory contract
SEC rules require RIAs to deliver the Form ADV Part 2A brochure to prospective clients at the time of or before entering into an advisory contract.
The Department of Labor's Prohibited Transaction Exemption 2020-02 allows financial advisers to receive conflicted compensation when they satisfy which primary requirement?
Answer: They provide impartial conduct standards and disclose conflicts in writing
PTE 2020-02 permits conflicted compensation for retirement account advice provided the adviser complies with impartial conduct standards and provides the required disclosures.
Under the Bank Secrecy Act, a financial institution must file a Suspicious Activity Report (SAR) within how many days of detecting a suspicious transaction?
Answer: 30 days
Financial institutions are required to file a SAR within 30 calendar days of initially detecting facts that may constitute a basis for filing.
Which CFP Board Standard addresses the obligation to keep client information confidential and outlines specific exceptions where disclosure is permitted?
Answer: Standard B.5 — Confidentiality of Client Information
CFP Board's Standard B.5 specifically governs the confidentiality of client information and identifies limited exceptions such as client consent or legal compulsion.
The concept of 'suitability' under FINRA Rule 2111 requires a broker to have a reasonable basis for believing a recommended strategy is suitable based on all of the following customer factors EXCEPT:
Answer: The broker's own commission rate on the product
Suitability analysis focuses exclusively on customer-specific factors; the broker's own commission is irrelevant to (and may undermine) the suitability determination.
Under ERISA, the 'exclusive benefit rule' requires that plan assets be used solely for which purpose?
Answer: The benefit of participants and beneficiaries and defraying reasonable plan expenses
ERISA's exclusive benefit rule mandates that fiduciaries manage plan assets solely in the interest of participants and beneficiaries and to defray reasonable administrative expenses.
A CFP® professional who provides financial planning services to a client while simultaneously earning commissions from products sold to that client must do which of the following?
Answer: Disclose the conflict of interest and obtain informed consent from the client
CFP Board's Standards require full disclosure of material conflicts of interest, including commission arrangements, and obtaining the client's informed consent to proceed.