CRPC Ethical and Fiduciary Duties 2

Question 1

A CRPC designee discovers that a client's current annuity generates high commissions but is unsuitable for the client's retirement income needs. What is the fiduciary obligation?

Accepted Answer

Recommend replacing it with a more suitable product even if the commission is lower

Answer

The fiduciary duty requires putting the client's interests first, including recommending products that better serve retirement needs even at lower compensation.

Question 2

Under the NACADA Code of Ethics, which action best demonstrates the duty of loyalty to a retirement planning client?

Accepted Answer

Avoiding any action that benefits the advisor at the client's expense

Answer

The duty of loyalty requires that the advisor place the client's interests above their own and avoid self-dealing.

Question 3

A retirement planner recommends a variable annuity to a 72-year-old client with a 10-year surrender period primarily because it offers a guaranteed lifetime income rider. What ethical concern is raised?

Accepted Answer

The surrender period may outlast the client's realistic planning horizon

Answer

A 10-year surrender period on a variable annuity for a 72-year-old raises suitability concerns since the client may need liquidity before the surrender period ends.

Question 4

Which of the following represents a violation of the confidentiality duty owed by a CRPC designee?

Accepted Answer

Disclosing a client's account balances to the client's adult child without written authorization

Answer

Disclosing a client's financial information to a third party, including family members, without proper written authorization violates the duty of confidentiality.

Question 5

A CRPC designee provides retirement planning services and also sells insurance products. Which practice best manages the resulting conflict of interest?

Accepted Answer

Disclosing the dual role and compensation structure fully in writing before providing recommendations

Answer

Full written disclosure of the dual role and how compensation is earned allows the client to make an informed decision about the advice they receive.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Ethical and Fiduciary Duties 2