WMS Documentation & Legal Requirements 2

Question 1

Under Regulation Best Interest (Reg BI), broker-dealers must provide clients with which document before or at the time of a recommendation?

Accepted Answer

Form CRS (Client Relationship Summary)

Answer

Reg BI requires broker-dealers to deliver Form CRS to retail customers at the beginning of the relationship.

Question 2

A wealth manager wants to update a client's investment policy statement (IPS) after a significant life event. What is the primary purpose of revising the IPS?

Accepted Answer

To realign the written strategy with the client's current goals and risk tolerance

Answer

The IPS should be revised whenever the client's circumstances change materially to ensure the written strategy remains aligned with current objectives.

Question 3

Which provision in the USA PATRIOT Act requires financial institutions to verify the identity of new clients?

Accepted Answer

Customer Identification Program (CIP)

Answer

The Customer Identification Program (CIP) rule requires firms to collect and verify identifying information before establishing an account.

Question 4

A trust document names a successor trustee. Under what circumstance does the successor trustee typically assume authority?

Accepted Answer

When the original trustee becomes incapacitated, resigns, or dies

Answer

A successor trustee steps in only when the original trustee can no longer serve due to incapacity, resignation, or death.

Question 5

What does a 'springing' durable power of attorney mean?

Accepted Answer

It becomes effective only upon a specified triggering event, typically incapacity

Answer

A springing POA 'springs' into effect upon a defined condition, most commonly the principal's legal incapacity.

(WMS) Wealth Management Specialist Certification Practice Test

(WMS) Wealth Management Specialist Certification Practice Test

WMS Documentation & Legal Requirements 2