RMA Professional Standards & Competencies 3 — Questions and Answers
Question 1: Under RMA professional standards, which situation would MOST warrant disclosure to a client before proceeding?
- The adviser recently attended a conference on annuities
- The adviser has a financial interest in a product being recommended (Correct answer)
- The client has a lower risk tolerance than typical clients
- The adviser uses third-party software for plan projections
Correct answer: The adviser has a financial interest in a product being recommended
Material conflicts of interest—including financial interests in recommended products—must be disclosed so clients can make informed decisions.
Question 2: When an RMA professional is uncertain whether a specific action is ethically permissible, the BEST first resource is:
- Social media peers in finance groups
- The RMA Standards of Professional Conduct and, if needed, the certifying body's ethics guidance (Correct answer)
- The client's personal attorney
- The employing firm's marketing department
Correct answer: The RMA Standards of Professional Conduct and, if needed, the certifying body's ethics guidance
The RMA code and ethics guidance documents are the authoritative source for resolving professional conduct questions.
Question 3: Which of the following best illustrates the competency of 'applying retirement income strategies'?
- Memorizing IRS contribution limits
- Constructing a floor-and-upside portfolio aligned with a client's essential vs. discretionary expenses (Correct answer)
- Selling the highest-rated annuity product available
- Following a standard 60/40 allocation for all retirees
Correct answer: Constructing a floor-and-upside portfolio aligned with a client's essential vs. discretionary expenses
Applying retirement income strategies means customizing approaches like floor-and-upside to match the client's actual income needs and risk capacity.
Question 4: An RMA must maintain client records for how long according to general professional and regulatory best practice?
- 1 year after each transaction
- At least 5–7 years, consistent with SEC/FINRA requirements and state regulations (Correct answer)
- Indefinitely, with no permitted destruction
- Until the client relationship ends
Correct answer: At least 5–7 years, consistent with SEC/FINRA requirements and state regulations
SEC and FINRA rules generally require retention of client records for 5–7 years, and state regulations may extend this period further.
Question 5: Professional objectivity in retirement planning means the RMA should base recommendations on:
- The products most recently promoted by the home office
- An unbiased analysis of the client's goals, resources, and circumstances (Correct answer)
- Consensus portfolio models used by the majority of advisers
- The client's stated preference even if financially harmful
Correct answer: An unbiased analysis of the client's goals, resources, and circumstances
Objectivity requires that recommendations be driven by rigorous, unbiased analysis tailored to each client's unique situation.
Question 6: Which of the following is an example of a 'soft skill' competency relevant to RMA practice?
- Calculating a Monte Carlo probability of success
- Communicating complex longevity risk concepts in plain language to anxious retirees (Correct answer)
- Selecting an appropriate discount rate for pension valuation
- Determining the optimal Social Security claiming age
Correct answer: Communicating complex longevity risk concepts in plain language to anxious retirees
Translating technical concepts into accessible language for clients is a communication soft skill distinct from technical calculation competencies.
Question 7: When a client's instructions conflict with the adviser's professional judgment about retirement security, the RMA should:
- Follow the client's instructions without comment
- Clearly explain the professional concern, document the discussion, and respect informed client autonomy (Correct answer)
- Refuse to implement any client instruction that seems suboptimal
- Escalate immediately to legal counsel
Correct answer: Clearly explain the professional concern, document the discussion, and respect informed client autonomy
Professional standards require the adviser to inform and document, but ultimately respect the informed client's autonomous decision-making rights.
RMA Professional Standards & Competencies 3
Under RMA professional standards, which situation would MOST warrant disclosure to a client before proceeding?