Professional Development & Standards 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 Professional Development & Standards flashcards as text
An investment adviser must deliver its Form ADV Part 2A brochure to a new client:
Answer: Before or at the time the advisory contract is entered into
The brochure must be delivered before or at the time of entering the advisory contract so the client can review it first.
An investment adviser representative's fiduciary duty to clients consists primarily of:
Answer: A duty of care and a duty of loyalty
Fiduciary duty requires acting in the client's best interest, with care in advice and loyalty by avoiding or disclosing conflicts.
An adviser wants to sell a security from its own inventory to an advisory client. Which is required?
Answer: Written disclosure of the capacity and client consent before the transaction is completed
Principal transactions require disclosure in writing of the adviser's role and the client's consent before completion of the trade.
An adviser's affiliated broker-dealer acts as broker for both the advisory client and the other party in a trade. This is an agency cross transaction, which requires:
Answer: Written client consent after full disclosure, plus confirmations and annual statements of such trades
Agency cross transactions require prior written consent, disclosure at confirmation, and at least annual summaries to the client.
The Section 28(e) safe harbor protects an adviser that pays more than the lowest commission for brokerage if the adviser determines in good faith that:
Answer: The commission is reasonable relative to the brokerage and research services received
The safe harbor covers research and brokerage services that benefit client accounts when the commission is reasonable in relation to the value received.
Which statement about an adviser's duty of best execution is correct?
Answer: The adviser must seek the most favorable overall terms reasonably available, considering more than commission cost
Best execution weighs price, execution quality, speed, and research—not commission cost alone.
An adviser must offer each client an updated brochure, or a summary of material changes, annually within how many days of its fiscal year end?
Answer: 120 days
Advisers file an annual updating amendment within 90 days of fiscal year end and deliver the brochure or summary to clients within 120 days.
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