What is a Registered Investment Advisor's (RIA) fiduciary duty?
RIAs must act in the best interest of their clients, placing client needs above their own.
Which regulation governs the behavior of RIAs?
The Investment Advisers Act of 1940 is the primary legislation governing RIAs’ conduct and duties.
What must be included in Form ADV Part 2?
This form includes a plain-English brochure that outlines the advisor’s qualifications, services, fees, and any disciplinary history.
When must a conflict of interest be disclosed?
RIAs must disclose any potential or actual conflicts of interest before or at the time advice is given.
How often must RIAs update their Form ADV?
Form ADV must be updated annually and whenever there are material changes.
What is 'cherry picking' in the context of portfolio management?
Cherry picking is the unethical practice of allocating profitable trades to favored accounts.
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Which of the following is an ethical responsibility of an RIA?
RIAs must provide full and fair disclosure of all material facts to clients.
What is 'soft dollar' compensation?
Soft dollars are benefits received by RIAs from brokers in exchange for directing trades, which must be disclosed.
What should an advisor do if a client requests inappropriate or illegal trades?
Advisors are required to reject instructions that are illegal or unethical, even at the client's request.