CFP Regulatory Frameworks & Compliance 3

Question 1

A registered investment adviser charging fees based on a percentage of AUM must deliver Form ADV Part 2A to new clients no later than:

Accepted Answer

At the time of or before entering into an advisory contract

Answer

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.

Question 2

The Department of Labor's Prohibited Transaction Exemption 2020-02 allows financial advisers to receive conflicted compensation when they satisfy which primary requirement?

Accepted Answer

They provide impartial conduct standards and disclose conflicts in writing

Answer

PTE 2020-02 permits conflicted compensation for retirement account advice provided the adviser complies with impartial conduct standards and provides the required disclosures.

Question 3

Under the Bank Secrecy Act, a financial institution must file a Suspicious Activity Report (SAR) within how many days of detecting a suspicious transaction?

Accepted Answer

30 days

Answer

Financial institutions are required to file a SAR within 30 calendar days of initially detecting facts that may constitute a basis for filing.

Question 4

Which CFP Board Standard addresses the obligation to keep client information confidential and outlines specific exceptions where disclosure is permitted?

Accepted Answer

Standard B.5 — Confidentiality of Client Information

Answer

CFP Board's Standard B.5 specifically governs the confidentiality of client information and identifies limited exceptions such as client consent or legal compulsion.

Question 5

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:

Accepted Answer

The broker's own commission rate on the product

Answer

Suitability analysis focuses exclusively on customer-specific factors; the broker's own commission is irrelevant to (and may undermine) the suitability determination.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Regulatory Frameworks & Compliance 3