WMS Documentation & Legal Requirements 3

Question 1

Under the Investment Advisers Act of 1940, an RIA managing $110 million in AUM is generally required to register with:

Accepted Answer

The SEC

Answer

Advisers with $100 million or more in AUM are generally required to register with the SEC rather than individual states.

Question 2

A beneficiary designation on a retirement account will override conflicting instructions in a client's will. This illustrates which legal principle?

Accepted Answer

Contractual supersession of testamentary documents

Answer

Beneficiary designations are contractual arrangements that supersede contradictory will provisions for assets that pass outside the probate estate.

Question 3

What is the primary legal difference between a revocable trust and an irrevocable trust regarding asset protection?

Accepted Answer

Assets in an irrevocable trust are generally beyond the reach of the grantor's creditors

Answer

Because the grantor relinquishes control over assets in an irrevocable trust, those assets are generally protected from the grantor's future creditors.

Question 4

The SEC's 'books and records' rule (Rule 204-2) requires investment advisers to retain most client-related records for a minimum of:

Accepted Answer

5 years

Answer

Rule 204-2 requires RIAs to preserve most required records for at least five years from the end of the fiscal year in which records were created.

Question 5

A client signs a new account form that includes a pre-dispute arbitration clause. What does this clause typically waive?

Accepted Answer

The client's right to pursue claims through the court system

Answer

A pre-dispute arbitration clause requires disputes to be resolved through arbitration rather than in a court of law.

(WMS) Wealth Management Specialist Certification Practice Test

(WMS) Wealth Management Specialist Certification Practice Test

WMS Documentation & Legal Requirements 3