FTT Financial Advisers Act

Question 1

What is the primary purpose of the Financial Advisers Act (FAA) in Singapore?

Accepted Answer

To regulate the giving of financial advice and the marketing and sale of investment products in Singapore

Answer

The Financial Advisers Act (FAA) regulates financial advisory businesses in Singapore, covering the giving of advice on investment products, the marketing of collective investment schemes, and the issuing of investment analyses and research reports.

Question 2

What is the 'Know Your Client' (KYC) obligation for financial advisers under the FAA?

Accepted Answer

To gather information on a client's financial situation, risk tolerance, investment experience, and investment objectives before making recommendations

Answer

The KYC obligation under the FAA requires financial advisers to collect information about a client's financial situation, investment experience, risk tolerance, and investment objectives so that any recommendations made are suitable for that specific client.

Question 3

The 'suitability' requirement under MAS guidelines means that:

Accepted Answer

A financial adviser must only recommend products that are appropriate for the client's specific financial profile

Answer

Suitability requires that financial advisers assess a client's financial situation, risk tolerance, and investment objectives and only recommend products that are appropriate for that particular client. A suitable product for one client may be unsuitable for another.

Question 4

What is the 'Customer Knowledge Assessment (CKA)' under MAS guidelines?

Accepted Answer

An assessment to determine whether a customer has the relevant knowledge or experience to transact in specified investment products without further advice

Answer

The CKA is an assessment process where financial institutions evaluate whether a retail customer has sufficient knowledge or experience to understand the risks of specified investment products (SIPs) before allowing them to transact in those products without investment advice.

Question 5

Under the FAA, what must a financial adviser provide to a retail client before recommending a specified investment product?

Accepted Answer

A Product Highlights Sheet (PHS) and the relevant prospectus or profile statement

Answer

Before recommending specified investment products to retail clients, advisers must provide the Product Highlights Sheet (PHS), which summarises key product features and risks, along with the relevant prospectus or profile statement registered with MAS.

Singapore FTT Practice Test

Singapore FTT Practice Test

FTT Financial Advisers Act