Chapter Ten
Ethical Practices and Fiduciary Obligations
(21 questions out of 130)
The regulators make you take this exam for one primary reason—to protect members of the public. With that in mind, they’re unwavering in their requirement that financial advisers know and understand the rules and principles surrounding ethical business practices. The NASAA Model Rules for Investment Advisers and Investment Adviser Representatives, and for Broker-Dealers and Agents, are reproduced in Appendixes A and B. Reading them over in their entirety provides a great review before your exam.
For you to do well on exam questions related to ethical practices and fiduciary obligations, you need to do more than simply know and memorize the concepts, although that is a necessary start. You need to be able to apply these rules to hypothetical scenarios. In a nutshell, there are four concepts at the core of the fiduciary (trusted adviser) relationship you will have with your clients. If you read every ethical question with these concepts in mind, you should be able to navigate even the trickiest of hypothetical situations.
- • Investors have a right to know. This is a simple conc