Series 66 – Uniform Combined State Law Exam Fiduciary Duties & Suitability Standards

Question 1

Under the Uniform Securities Act, investment advisers are held to which standard when dealing with clients?

Accepted Answer

Fiduciary standard

Answer

Investment advisers registered under the Uniform Securities Act are held to a fiduciary standard, requiring them to act in the client's best interest at all times.

Question 2

Which of the following best describes the fiduciary duty of loyalty owed by an investment adviser to a client?

Accepted Answer

Placing the client's interests ahead of the adviser's own interests

Answer

The duty of loyalty requires investment advisers to place the client's interests above their own, avoiding or fully disclosing any conflicts of interest.

Question 3

A broker-dealer registered under the Uniform Securities Act is generally held to which standard when making recommendations to clients?

Accepted Answer

Suitability standard

Answer

Broker-dealers are traditionally held to a suitability standard, meaning recommendations must be suitable for the client based on their financial situation and objectives.

Question 4

Under the fiduciary standard, what must an investment adviser do when a conflict of interest exists?

Accepted Answer

Disclose the conflict and obtain client consent

Answer

Fiduciaries must disclose material conflicts of interest to clients and obtain informed consent before proceeding with a conflicted transaction.

Question 5

Which of the following client factors is LEAST relevant when determining the suitability of an investment recommendation?

Accepted Answer

The adviser's commission rate

Answer

Suitability analysis focuses on client-specific factors such as time horizon, risk tolerance, and financial situation — not the adviser's compensation.

Series 66 – Uniform Combined State Law Exam Practice Test

Series 66 – Uniform Combined State Law Exam Practice Test

Series 66 – Uniform Combined State Law Exam Fiduciary Duties & Suitability Standards