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
A client asks her agent to share 50% of the profits in her account because the agent "knows what he's doing." The agent contributed nothing to the account. Is this permissible?
Answer: No, sharing is allowed only with written consent of client and firm and in proportion to the agent's contribution
Agents may share in profits or losses only with written client and BD consent, proportionate to capital contributed (family accounts excepted).
Which loan arrangement between an agent and a client is generally permitted?
Answer: Borrowing from a client that is a bank in the business of lending money
Borrowing from clients is prohibited unless the client is a financial institution in the business of lending (or a permitted family/firm arrangement).
An advisory contract states, "Client waives any right of action against the Adviser for losses." How is this clause viewed?
Answer: It is an unenforceable hedge clause and its use is a prohibited practice
Clauses that purport to waive a client's rights under securities law are void and misleading.
A dual registrant (BD agent and IAR) meets with a retail investor. What is a key communication obligation?
Answer: Clearly disclose the capacity in which he is acting for each recommendation
Dual registrants must make clear whether they act as a broker or adviser, since duties and fees differ.
Under Regulation S-P, when must a financial institution provide its initial privacy notice to a new customer?
Answer: Not later than when the customer relationship is established
The initial privacy notice is due no later than when the customer relationship is established.
An advisory firm organized as a partnership admits a new minority partner. What must it do?
Answer: Notify clients of the change in membership within a reasonable time
Partnership advisers must notify clients promptly of changes in membership; minority changes are not an assignment.
Which best describes an IAR's role as a client advocate when a client wants to make an impulsive, unsuitable trade?
Answer: Explain the risks and why it conflicts with the client's goals, document the discussion, and if the client insists, record it as unsolicited
Advocacy means candid risk communication and documentation while respecting the client's final decision.
How this page was made: written with AI tools and published by Nathan Beja, founder of Practice Test Geeks, who is responsible for its content. Exam facts are checked against the official sources listed below. Not reviewed by a subject-matter expert. Editorial policy
Sources & references
Exam facts on this page (fees, format, dates, passing scores) are checked against these official sources; the date is our last check. Editorial policy