CIC Ethics & Professional Standards 4

Question 1

A CIC is leaving a firm and wants to contact clients at the new firm. Which action is ethically permissible?

Accepted Answer

Using publicly available information to reconnect with former clients

Answer

Using publicly available information to contact former clients is permissible, but taking or using proprietary client records from a former employer is not.

Question 2

When must a CIC update a client's Investment Policy Statement (IPS)?

Accepted Answer

Whenever there is a material change in the client's financial situation or objectives

Answer

The IPS should be updated whenever a material change occurs in the client's circumstances, goals, or risk tolerance to ensure ongoing suitability.

Question 3

A CIC firm's compliance manual prohibits acceptance of entertainment valued over $150 per event. A broker invites the CIC to a $300 sports event. The CIC should:

Accepted Answer

Decline the invitation to comply with firm policy

Answer

Firm compliance policies must be followed, and circumventing them through technical workarounds still violates the spirit and intent of the rule.

Question 4

A CIC is hired to manage a pension fund. The plan sponsor instructs the CIC to invest solely in the sponsor's own company stock. The CIC should:

Accepted Answer

Refuse if the concentration creates undue risk to plan beneficiaries

Answer

As a fiduciary to plan beneficiaries, the CIC must refuse instructions that create imprudent concentration risk, even when they come from the plan sponsor.

Question 5

What is the primary purpose of maintaining client confidentiality under CIC ethical standards?

Accepted Answer

To protect clients from unauthorized disclosure of their personal and financial information

Answer

Client confidentiality protects the client's privacy and trust, which is fundamental to the advisor-client relationship.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Ethics & Professional Standards 4