Advisor Ethics and Communication Flashcards
7 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Advisor Ethics and Communication flashcards as text
A mortgage advisor discovers mid-process that a client's stated income on the application does not match tax documents provided. What is the advisor's ethical obligation?
Answer: Disclose the discrepancy to the lender and work with the client to correct the application
Advisors must ensure application accuracy and cannot knowingly submit false income information to lenders.
Which communication practice best demonstrates an advisor's commitment to informed consent in the mortgage process?
Answer: Providing a Loan Estimate and explaining all fees before the client commits
Informed consent requires timely, written disclosure of loan terms so clients can make decisions before being obligated.
A CMA advisor receives a referral fee from a title company for directing clients to their services. Under RESPA, this arrangement is:
Answer: Prohibited unless the title company provides an affiliated business disclosure
RESPA Section 8 prohibits kickbacks for referrals; an Affiliated Business Arrangement disclosure is required when a referral relationship exists.
When a client asks an advisor to recommend a loan product that maximizes the advisor's commission rather than fitting the client's needs, the ethical response is to:
Answer: Decline and recommend the product that best fits the client's financial situation
Advisors have a duty to act in the client's best interest regardless of compensation incentives.
An advisor is communicating with an elderly client who appears confused about the loan terms. The best ethical practice is to:
Answer: Slow down, use plain language, and confirm comprehension before proceeding
Advisors must ensure vulnerable clients fully understand loan terms, which may require extra time and simplified communication.
A mortgage advisor learns that a competitor is offering the same client better terms on a comparable loan. Ethical conduct requires the advisor to:
Answer: Inform the client they are free to compare offers and make their own decision
Advisors must respect client autonomy and not use pressure tactics to prevent clients from seeking better options.
Which scenario represents a clear conflict of interest that a CMA advisor must disclose?
Answer: The advisor's spouse is a co-owner of the appraisal firm used on the transaction
A family financial interest in a transaction service provider creates a material conflict of interest that must be disclosed to the client.