CIC Professional Qualifications and Integrity 3 — Questions and Answers
Question 1: A CIC holder receives a gift worth $300 from a vendor seeking to manage part of a client's portfolio. Under integrity standards, what is the most appropriate response?
- Accept the gift as it is below $500
- Decline the gift to avoid any appearance of improper influence (Correct answer)
- Accept but disclose the gift to the compliance department only
- Accept and use the gift as a credit toward the vendor's fees
Correct answer: Decline the gift to avoid any appearance of improper influence
Accepting gifts from vendors seeking business creates a conflict of interest and should be declined to maintain objectivity and integrity.
Question 2: Which of the following is NOT a typical requirement for maintaining the CIC designation in good standing?
- Completing annual continuing education credits
- Adhering to the CIC Code of Ethics
- Maintaining membership in a specified political party (Correct answer)
- Paying renewal fees on schedule
Correct answer: Maintaining membership in a specified political party
Political affiliation is never a criterion for maintaining a professional financial designation.
Question 3: A CIC candidate has a prior misdemeanor conviction for a non-financial crime that occurred 15 years ago. How should this be handled during the application process?
- Omit it since it was minor and occurred long ago
- Disclose it fully and let the credentialing body assess its relevance (Correct answer)
- Only disclose if directly asked by an interviewer
- Disclose only if the conviction is publicly available
Correct answer: Disclose it fully and let the credentialing body assess its relevance
CIC applications require full and accurate disclosure of all past legal issues, regardless of severity or age, and the body determines relevance.
Question 4: An investment counselor holding the CIC designation realizes mid-engagement that a client's objective requires expertise beyond their competence. What should they do?
- Proceed anyway to avoid losing the client
- Refer the client to a more qualified professional or bring in a specialist (Correct answer)
- Charge a lower fee to compensate for limited expertise
- Disclose the limitation verbally but proceed as instructed
Correct answer: Refer the client to a more qualified professional or bring in a specialist
Competence standards require CIC holders to recognize their limits and refer or collaborate when a client's needs exceed their expertise.
Question 5: Which scenario best illustrates the concept of 'professional skepticism' for a CIC holder reviewing a third-party investment report?
- Accepting the report's conclusions without question because the firm is reputable
- Critically evaluating assumptions and independently verifying key claims (Correct answer)
- Sharing the report with competitors to get their opinions
- Submitting the report to regulators before using it
Correct answer: Critically evaluating assumptions and independently verifying key claims
Professional skepticism requires independent critical evaluation rather than uncritical reliance on a source's reputation.
Question 6: A CIC holder is aware that their firm is about to be acquired. A friend asks for advice on whether to invest in the firm's stock before the announcement. What must the CIC holder do?
- Provide general guidance only, without specific recommendations
- Refuse to discuss the matter and remind the friend of insider trading laws (Correct answer)
- Advise the friend to buy and then report it to compliance afterward
- Confirm the acquisition but suggest waiting until public announcement
Correct answer: Refuse to discuss the matter and remind the friend of insider trading laws
Using material non-public information constitutes insider trading, and a CIC holder must refuse to share it and warn the friend of legal prohibitions.
Question 7: Under the CIC standards, 'prudent expert' conduct means an investment counselor should make decisions consistent with:
- The average layperson's understanding of investing
- The knowledge and care a prudent professional with relevant expertise would exercise (Correct answer)
- The most aggressive return-seeking strategy available
- The minimum standard set by local regulations only
Correct answer: The knowledge and care a prudent professional with relevant expertise would exercise
The prudent expert standard holds CIC holders to the higher bar of a knowledgeable professional, not merely a layperson.
CIC Professional Qualifications and Integrity 3
A CIC holder receives a gift worth $300 from a vendor seeking to manage part of a client's portfolio.
Under integrity standards, what is the most appropriate response?