CBB Client Relations & Ethics 1 — Questions and Answers
Question 1: What is a key principle in maintaining ethical client relations as a business broker?
- Aggressively closing the sale
- Promising unrealistic returns
- Using vague language
- Being honest and transparent with clients (Correct answer)
Correct answer: Being honest and transparent with clients
Acting with honesty and transparency builds trust and maintains professional integrity.
Question 2: Which action is essential for building a long-term relationship with clients?
- Waiting for clients to follow up
- Avoiding difficult conversations
- Maintaining consistent communication (Correct answer)
- Focusing only on closing the deal
Correct answer: Maintaining consistent communication
Regular and clear communication fosters trust and professionalism throughout the process.
Question 3: What is the broker’s duty when a potential conflict of interest arises?
- Ignore the issue
- Inform only the buyer
- Disclose the conflict to all parties (Correct answer)
- Delay the transaction
Correct answer: Disclose the conflict to all parties
Brokers must disclose any conflicts of interest to ensure transparency and fairness in the transaction.
Question 4: What is the ethical approach to representing both buyer and seller in a transaction?
- Keep intentions confidential from both parties
- Favor the party offering the higher commission
- Disclose dual agency and obtain consent (Correct answer)
- Switch representation halfway through
Correct answer: Disclose dual agency and obtain consent
Dual agency must be disclosed and agreed to by both parties to avoid a breach of fiduciary duty.
Question 5: Which behavior best reflects a broker's fiduciary responsibility?
- Maximizing personal commission
- Sharing client details with competitors
- Putting the client’s interest first (Correct answer)
- Delegating without disclosure
Correct answer: Putting the client’s interest first
Acting in the best interest of the client is the core of fiduciary duty.
Question 6: What should a broker do if a client asks them to hide negative financials?
- Agree to secure the deal
- Ignore the request and do nothing
- Comply with full disclosure laws (Correct answer)
- Transfer responsibility to the accountant
Correct answer: Comply with full disclosure laws
Misrepresentation is unethical and potentially illegal. Brokers must present accurate financial information.
CBB Client Relations & Ethics 1
What is a key principle in maintaining ethical client relations as a business broker?