Ethics & Professional Responsibility 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 Ethics & Professional Responsibility flashcards as text
A fiduciary duty owed by an investment adviser to a client includes which two core elements?
Answer: Duty of care and duty of loyalty
Advisers must act in the client's best interest, providing advice with care and placing the client's interests ahead of their own.
May an investment advisory contract be assigned to another adviser without the client's knowledge?
Answer: No, assignment requires the client's consent
Advisory contracts cannot be assigned without client consent, and a change of control counts as an assignment.
Performance-based advisory fees may generally be charged to which clients?
Answer: Qualified clients meeting asset or net worth thresholds
Performance fees are restricted to qualified clients who meet assets-under-management or net worth thresholds.
An adviser has custody of client funds. Which requirement applies?
Answer: Funds must be held by a qualified custodian with account statements sent to clients
Advisers with custody must use a qualified custodian and ensure clients receive account statements, at least quarterly.
An investment adviser charges a client an advisory fee that is unreasonably high compared with services provided. This is:
Answer: A dishonest or unethical practice
Charging unreasonable advisory fees is listed as an unethical practice for investment advisers.
An adviser's firm acts as broker for both sides of a trade between two advisory clients. What is required?
Answer: Written client consent and disclosure for the agency cross transaction
Agency cross transactions require prior written client consent, disclosure of the dual role and periodic confirmations.
An adviser requires clients to prepay advisory fees of more than $500 per client six or more months in advance. Which is typically required?
Answer: An audited balance sheet filed with the state
Under state rules, advisers requiring large, long-term prepayments of fees must provide an audited balance sheet to demonstrate financial solvency.
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