CIC Ethics & Professional Standards 5

Question 1

A CIC is approached by a wealthy client who demands a guaranteed annual return of 12%. The CIC should:

Accepted Answer

Decline to make guarantees and explain that investment returns are not guaranteed

Answer

Investment returns cannot be guaranteed, and making such promises would violate ethical and regulatory standards regardless of client agreements.

Question 2

Which of the following actions by a CIC most clearly demonstrates independence and objectivity?

Accepted Answer

Conducting independent research before accepting a sell-side analyst's recommendation

Answer

Conducting independent research before relying on external recommendations demonstrates the analytical independence required for objective advice.

Question 3

A CIC fails to disclose a material fee structure change until 60 days after implementation. This most likely violates:

Accepted Answer

The duty of fair dealing and timely disclosure to clients

Answer

Material changes to fee structures must be disclosed to clients promptly; delayed disclosure violates the duty of fair dealing.

Question 4

A CIC's firm is acquired, and new management directs advisors to move all client assets to proprietary products. The CIC should:

Accepted Answer

Evaluate each client's situation and recommend changes only when they are in the client's best interest

Answer

Client suitability and best interest obligations continue regardless of firm ownership changes; proprietary products may only be recommended when genuinely suitable.

Question 5

Under CIC standards, what is required when a CIC uses a model that is not their own in client communications or proposals?

Accepted Answer

Attribution must be given to the original source to avoid misrepresentation

Answer

Using third-party models or work without attribution constitutes misrepresentation and violates professional integrity standards.

(CIC) Certified Investment Counselor Practice Test

(CIC) Certified Investment Counselor Practice Test

CIC Ethics & Professional Standards 5