CIM Client Relations 4

Question 1

An investment adviser registered with the SEC owes clients which duty under the Investment Advisers Act of 1940?

Accepted Answer

A fiduciary duty of care and loyalty

Answer

The SEC interprets the Advisers Act as imposing a fiduciary duty of care and loyalty on advisers.

Question 2

Which part of Form ADV is the narrative 'brochure' that advisers give clients?

Accepted Answer

Part 2A

Answer

Form ADV Part 2A is the plain-English brochure describing services, fees, and conflicts.

Question 3

A manager receives a client complaint about an unauthorized trade. What is the best first step?

Accepted Answer

Document the complaint and escalate it to compliance under firm procedures

Answer

Complaints must be recorded and escalated to compliance so they can be investigated and resolved properly.

Question 4

Which situation is a conflict of interest that must be disclosed to clients?

Accepted Answer

The manager receives higher compensation for recommending proprietary funds

Answer

Extra compensation tied to particular products creates an incentive that clients need to know about.

Question 5

An elderly client suddenly asks to wire most of their assets to a new 'friend' met online. What should the manager do?

Accepted Answer

Raise concerns with the client, contact the trusted contact person, and escalate per firm policy for possible exploitation

Answer

FINRA Rules 4512 and 2165 allow firms to use trusted contacts and temporarily hold disbursements when financial exploitation is suspected.

CIM - Chartered Investment Manager Practice Test