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
Under the NASAA model rule, a state-registered adviser that requires prepayment of more than $500 in fees six or more months in advance must provide clients with what?
Answer: An audited balance sheet
Substantial prepayment triggers the requirement to deliver an audited balance sheet with the brochure.
An adviser's financial condition is reasonably likely to impair its ability to meet commitments to clients for whom it holds discretion. What must it do?
Answer: Promptly disclose the condition to clients
Advisers with discretion, custody, or prepaid fees must promptly disclose any precarious financial condition to clients.
An adviser engages in agency cross transactions. Which requirement applies to client communication?
Answer: Prior written consent, a confirmation for each trade, and at least an annual summary statement
Agency cross trades need advance written consent, per-trade confirmations, and periodic summary statements.
An IAR notices that an elderly client seems confused and is suddenly trying to wire funds to a new "friend" overseas. What is the most appropriate first step?
Answer: Follow firm procedures, which may include contacting the trusted contact person and escalating for a possible temporary hold
Firms protect vulnerable adults by using trusted contacts and escalation procedures, including possible temporary holds.
An investment adviser receives a written complaint from a client. What is the proper handling?
Answer: Keep it in the firm's records and address it promptly
Written complaints must be retained as required records and handled promptly.
An IAR posts investment commentary on social media to attract new clients. How is this communication treated?
Answer: It may be advertising subject to antifraud rules, firm supervision, and recordkeeping
Business-related social media posts are communications subject to advertising, supervision, and record-retention requirements.
An adviser charges a client a fee based on a share of capital gains. Under what condition is this generally permitted?
Answer: When the client meets the definition of a qualified client
Performance-based fees are generally allowed only for qualified clients meeting net worth or assets-under-management thresholds.
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