CIC Client Communication and Disclosure 4

Question 1

Under NASAA model rules, how often must an investment adviser deliver or offer to deliver its brochure to existing clients?

Accepted Answer

Annually, with an offer to deliver the full brochure

Answer

NASAA rules require advisers to deliver or offer to deliver their Form ADV brochure to existing clients annually.

Question 2

An elderly client shows signs of cognitive decline during account review meetings. The investment counselor's best course of action is to:

Accepted Answer

Note the observations, consult compliance, and consider involving a trusted contact person

Answer

Suspected diminished capacity should be documented and escalated through compliance channels, with consideration given to contacting the designated trusted contact.

Question 3

Which statement about risk disclosure in investment advisory communications is accurate?

Accepted Answer

Risk disclosure must be specific to the actual risks of the recommended strategy or product

Answer

Meaningful risk disclosure must be specific and relevant to the actual investment risks the client faces, not generic or vague.

Question 4

A client has a discretionary account. How does this affect the communication requirements for individual trades?

Accepted Answer

Post-trade confirmations and periodic account statements must still be provided

Answer

Even in discretionary accounts, trade confirmations and periodic statements must be delivered to keep clients informed.

Question 5

Under the SEC Marketing Rule, which type of testimonial from a client is now permissible for investment advisers?

Accepted Answer

Client testimonials, subject to specific disclosure requirements and conditions

Answer

The 2021 Marketing Rule permits client testimonials provided advisers include required disclosures about the compensation arrangement and that it is a testimonial.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Client Communication and Disclosure 4