CCRM Ethical Practice 5 — Questions and Answers
Question 1: An ethical professional's duty of loyalty primarily runs to:
- The firm's shareholders
- The client and adherence to applicable professional standards (Correct answer)
- The highest-paying client segment
- Internal management hierarchy
Correct answer: The client and adherence to applicable professional standards
Duty of loyalty in client relationship management flows first to the client and then to upholding professional ethical standards.
Question 2: What is 'churning' in the context of ethical client management?
- Overloading clients with too many reports
- Excessive transactions in a client account primarily to generate commissions (Correct answer)
- Rotating clients between managers to prevent over-reliance
- Frequently updating client risk profiles
Correct answer: Excessive transactions in a client account primarily to generate commissions
Churning is the unethical practice of executing unnecessary transactions to increase commissions at the client's expense.
Question 3: Ethical communication with clients requires that information be presented:
- In the most favorable light to encourage product adoption
- Accurately, clearly, and without misleading omissions (Correct answer)
- With selective emphasis on positive outcomes
- In technical language to demonstrate expertise
Correct answer: Accurately, clearly, and without misleading omissions
Ethical communication mandates that all information conveyed to clients be accurate, balanced, and free of misleading omissions.
Question 4: A client discloses sensitive personal information during an advisory session. The CCRM should:
- Share it with colleagues to improve service quality
- Keep it strictly confidential and use it only as necessary to serve the client (Correct answer)
- Record it in accessible shared systems for team convenience
- Disclose it to the client's family if they inquire
Correct answer: Keep it strictly confidential and use it only as necessary to serve the client
Confidentiality requires that personal disclosures be protected and used only in ways that directly serve the client's interests.
Question 5: The concept of 'independent judgment' in ethical practice means:
- Making decisions without consulting the client
- Forming professional conclusions free from undue external influence or bias (Correct answer)
- Acting on behalf of the client without oversight
- Ignoring regulatory guidance in favor of experience
Correct answer: Forming professional conclusions free from undue external influence or bias
Independent judgment requires that professional conclusions be based on objective analysis rather than pressure from clients, employers, or peers.
Question 6: A prospective client asks a CCRM to compare the firm's services by misrepresenting competitors. The ethical response is to:
- Provide the requested comparisons to win the business
- Decline to misrepresent competitors and offer only accurate, factual comparisons (Correct answer)
- Avoid comparisons entirely and only discuss the firm's own strengths
- Acknowledge the request and escalate to marketing
Correct answer: Decline to misrepresent competitors and offer only accurate, factual comparisons
Ethical standards prohibit misrepresenting competitors; professionals must rely on truthful, substantiated comparisons only.
Question 7: When a CCRM professional is uncertain whether an action is ethical, the best first step is to:
- Proceed and document the decision afterward
- Consult the firm's code of ethics, compliance department, or a senior ethical authority (Correct answer)
- Ask the client for permission
- Benchmark against what competitors commonly do
Correct answer: Consult the firm's code of ethics, compliance department, or a senior ethical authority
Ethical uncertainty should always trigger consultation with established codes of conduct or compliance professionals before action is taken.
CCRM Ethical Practice 5
An ethical professional's duty of loyalty primarily runs to: