CSC Working with Retail Clients 4

Question 1

What must a registrant do when they identify a material conflict of interest with a client?

Accepted Answer

Disclose the conflict to the client and either avoid or manage it in the client's best interest

Answer

Registrants must disclose material conflicts of interest to clients and take steps to avoid or manage the conflict in the client's best interest.

Question 2

A client's estate plan requires assets to transfer to a specific beneficiary upon death. Which registered account feature directly supports this?

Accepted Answer

Designated beneficiary on a registered plan like an RRSP or TFSA

Answer

Registered accounts such as RRSPs and TFSAs allow the account holder to designate a beneficiary so that assets pass directly outside of the estate upon death.

Question 3

Which type of account allows a retail client to borrow money from the dealer to purchase securities?

Accepted Answer

Margin account

Answer

A margin account allows clients to borrow funds from the dealer to buy more securities than they could with their own cash, using the securities as collateral.

Question 4

What is the main regulatory concern with recommending a high-fee mutual fund when a lower-cost equivalent exists?

Accepted Answer

It may represent a conflict of interest if the advisor earns higher compensation from the higher-fee product

Answer

Under Client-Focused Reforms, recommending a higher-fee product when a materially similar lower-cost option exists may indicate the advisor's compensation interest outweighs the client's best interest.

Question 5

A power of attorney (POA) grants someone authority to act on a client's behalf. Which statement about POAs is correct for advisor dealings?

Accepted Answer

The POA document must be reviewed and accepted by the firm before acting on the attorney's instructions

Answer

Advisors must obtain and have the firm review the POA documentation before accepting instructions from the attorney-in-fact to protect the client's interests.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Working with Retail Clients 4