Client Communication & Advocacy Flashcards
7 cards from real Series 66 – Uniform Combined State Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Communication & Advocacy flashcards as text
An IAR receives verbal discretionary authority from a client and places the first discretionary trade. Under the NASAA model rule, when must written authorization be obtained?
Answer: Within 10 business days after the first discretionary order
IAs may exercise verbal discretion if written authorization is obtained within 10 business days of the first discretionary transaction.
A client says, "Buy 500 shares of XYZ today, but use your judgment on the price and timing." Is written discretionary authority required?
Answer: No, because discretion limited to time and price for that day is not considered discretionary authority
Time-and-price discretion on a client-specified security and quantity is not considered discretionary authority.
Before engaging in a principal transaction with an advisory client, what must an investment adviser do?
Answer: Disclose its capacity in writing and obtain the client's consent before completion of each transaction
Advisers must give written disclosure and get client consent before completion of each principal trade.
Which communication practice best reflects an adviser's duty to disclose conflicts of interest?
Answer: Disclosing material conflicts, such as receiving 12b-1 fees on recommended funds, before or at the time of the recommendation
Material conflicts must be disclosed proactively so clients can give informed consent.
An agent makes a cold call to a prospect at 9:30 p.m. the prospect's local time. What rule has been broken?
Answer: Telemarketing calls are restricted to between 8 a.m. and 9 p.m. in the called party's local time
Telephone solicitation rules limit calls to 8 a.m.–9 p.m. local time of the person being called.
During a cold call, a prospect asks to be placed on the firm's do-not-call list. What must the firm do?
Answer: Honor the request and stop calling that number
Firms must keep and honor their own do-not-call lists when a person asks not to be called.
Which item must a client's advisory contract with a state-registered IA disclose under the Uniform Securities Act and NASAA rules?
Answer: The services to be provided, the term, the fee formula, and whether the adviser has discretionary power
Advisory contracts must spell out services, term, fees, refund policy, and any discretionary authority.
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