Working with Retail Clients Flashcards

What must a registrant do when they identify a material conflict of interest with a client?

Answer: Disclose the conflict to the client and either avoid or manage it in the client's best interest

Registrants must disclose material conflicts of interest to clients and take steps to avoid or manage the conflict in the client's best interest.

A client's estate plan requires assets to transfer to a specific beneficiary upon death. Which registered account feature directly supports this?

Answer: Designated beneficiary on a registered plan like an RRSP or TFSA

Registered accounts such as RRSPs and TFSAs allow the account holder to designate a beneficiary so that assets pass directly outside of the estate upon death.

Which type of account allows a retail client to borrow money from the dealer to purchase securities?

Answer: Margin account

A margin account allows clients to borrow funds from the dealer to buy more securities than they could with their own cash, using the securities as collateral.

What is the main regulatory concern with recommending a high-fee mutual fund when a lower-cost equivalent exists?

Answer: It may represent a conflict of interest if the advisor earns higher compensation from the higher-fee product

Under Client-Focused Reforms, recommending a higher-fee product when a materially similar lower-cost option exists may indicate the advisor's compensation interest outweighs the client's best interest.

A power of attorney (POA) grants someone authority to act on a client's behalf. Which statement about POAs is correct for advisor dealings?

Answer: The POA document must be reviewed and accepted by the firm before acting on the attorney's instructions

Advisors must obtain and have the firm review the POA documentation before accepting instructions from the attorney-in-fact to protect the client's interests.

Under anti-money laundering (AML) rules in Canada, when is a registrant required to file a Suspicious Transaction Report (STR)?

Answer: When there are reasonable grounds to suspect a transaction is related to money laundering or terrorist financing

STRs must be filed with FINTRAC when there are reasonable grounds to suspect a transaction or attempted transaction is connected to money laundering or terrorist financing, regardless of the dollar amount.

Which best describes the role of the Ombudsman for Banking Services and Investments (OBSI) for retail clients?

Answer: OBSI provides free, independent dispute resolution for clients who cannot resolve complaints with their firm

OBSI is an independent complaints resolution service that investigates disputes between retail clients and investment firms at no cost to the client.