RIA Client Suitability & Fiduciary Duty 2

Question 1

When an investment adviser has a conflict of interest, the fiduciary duty requires:

Accepted Answer

Disclosing the conflict and obtaining informed consent, or eliminating the conflict

Answer

Fiduciary duty requires either eliminating conflicts of interest or fully disclosing them to allow the client to give informed consent.

Question 2

Which scenario demonstrates a potential breach of fiduciary duty?

Accepted Answer

Recommending a proprietary fund without disclosing the adviser's financial interest in it

Answer

Recommending proprietary products without disclosing the adviser's financial interest violates the duty of loyalty and disclosure requirements.

Question 3

For elderly clients showing signs of cognitive decline, investment advisers should:

Accepted Answer

Take extra precautions, document interactions carefully, and consider involving trusted contacts

Answer

When cognitive decline is suspected, advisers should exercise extra care, document interactions, and may involve trusted contacts to protect the client's interests.

Question 4

Best execution requires investment advisers to:

Accepted Answer

Seek the most favorable terms reasonably available under the circumstances

Answer

Best execution requires advisers to seek the most favorable terms reasonably available, considering price, speed, likelihood of execution, and other relevant factors.

Question 5

When must an investment adviser disclose material changes to Form ADV?

Accepted Answer

Annually, and promptly when material changes occur

Answer

Form ADV must be updated annually and promptly amended when any information becomes materially inaccurate.

(RIA) Registered Investment Advisor Practice Test

(RIA) Registered Investment Advisor Practice Test

RIA Client Suitability & Fiduciary Duty 2