CRPC Ethical and Fiduciary Duties 4

Question 1

A CRPC designee manages a discretionary retirement account and makes several trades that generate high commissions without meaningfully improving the client's portfolio. This is best described as:

Accepted Answer

Churning, a violation of fiduciary and ethical duties

Answer

Churning — excessive trading designed to generate commissions rather than benefit the client — is a serious ethical and legal violation.

Question 2

Which statement correctly describes the difference between a suitability standard and a fiduciary standard in retirement advice?

Accepted Answer

Fiduciary requires the advisor to put client interests first, while suitability only requires that recommendations be reasonably appropriate

Answer

The fiduciary standard imposes a higher duty — placing client interests first — while suitability requires only that recommendations be reasonably appropriate for the client.

Question 3

A retirement planner discovers that a data entry error caused a client to be underinvested in equities for two years, resulting in a missed return opportunity. What is the ethical obligation?

Accepted Answer

Disclose the error to the client and discuss remediation options

Answer

Honesty and transparency require full disclosure of errors to clients, along with a discussion of any remediation steps that may be appropriate.

Question 4

Which of the following is NOT typically considered a fiduciary duty under standard professional ethics for retirement planners?

Accepted Answer

Duty to guarantee investment returns

Answer

Fiduciaries are not required to guarantee investment returns; their obligations center on loyalty, care, and confidentiality, not investment outcomes.

Question 5

A CRPC designee is asked to sign a client's retirement account application form without reviewing the client's current financial situation. What should the advisor do?

Accepted Answer

Refuse to sign until a proper suitability review has been completed

Answer

An advisor has an ethical duty to conduct a proper suitability review before signing applications or making recommendations, regardless of time pressure.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Ethical and Fiduciary Duties 4