CRPC Ethical and Fiduciary Duties 3

Question 1

Which scenario illustrates an undisclosed conflict of interest that would violate fiduciary standards for a retirement planner?

Accepted Answer

Recommending a mutual fund in which the advisor holds a personal investment without disclosing this fact

Answer

Recommending a security in which the advisor has an undisclosed personal financial interest is a clear conflict of interest that must be disclosed.

Question 2

Under DOL fiduciary rules, when must a retirement advisor providing rollover recommendations act in the client's best interest?

Accepted Answer

Whenever providing rollover advice regardless of whether assets are currently in an ERISA plan

Answer

DOL fiduciary rules require best-interest conduct whenever providing rollover advice, including recommendations to move assets from a plan to an IRA.

Question 3

A CRPC designee advises a client to consolidate multiple retirement accounts into a single IRA managed by the advisor's firm. What disclosure obligation exists?

Accepted Answer

The advisor must disclose any compensation received as a result of the consolidation

Answer

Any compensation the advisor or firm receives as a result of a rollover or consolidation recommendation must be fully disclosed to the client.

Question 4

Which of the following is the most appropriate response when a CRPC designee realizes they lack sufficient expertise in a specialized area relevant to a client's retirement plan?

Accepted Answer

Refer the client to a qualified specialist or collaborate with one

Answer

The duty of competence requires advisors to either develop the necessary expertise or refer clients to qualified specialists when a specialized area is outside their knowledge.

Question 5

A retirement planner learns that a 78-year-old client has recently changed their beneficiary to a new acquaintance and made several large withdrawals. What is the appropriate action?

Accepted Answer

Document the observations and consider reporting suspected financial exploitation to the appropriate authorities

Answer

Unusual financial activity in elderly clients may indicate exploitation, and advisors have an ethical — and in many states legal — obligation to document and report such concerns.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Ethical and Fiduciary Duties 3