NAPA CPFA® CERTIFICATION EXAM CONTENT
OUTLINE FLASH CARDS WITH VERIFID
QUSTIONS AND ANSWERS COMPLETE
SOLUTIONS 100% VERIFIED!!| INSTANT PDF
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Differentiate investment advice and investment education - ANSWER👀 Education =
guidance to help others makes their OWN decisions
Advice: significant detail about an employee's personal finances, goals and risk tolerance
are gathered in order to make projections.
Describe the "best interest contract exemption" under the DOL fiduciary regulation -
ANSWER👀 The Best Interest Contract Exemption permits financial advisers (i.e., an
individual who is a representative of an investment adviser, broker-dealer, insurance
company, or bank or similar financial institution) and the financial institutions that employ
them to continue to rely on many current compensation and fee practices, as long as they
meet specific conditions intended to ensure that financial institutions mitigate conflicts of
interest and that they, and their financial advisers, provide investment advice that is in the
best interests of their customers.
Differentiate between 3(16), 3(21) and 3(38) fiduciaries - ANSWER👀 3(16): • Ensure plan
operates in accordance with ERISA
• Ensure plan follows its terms
• Provide participant notices/disclosures
• Sign and file Form 5500 (Annual return)
• Authorize distribution/loans
• Select and monitor service providers
• Ensure plan expenses are reasonable
,3(21) - ANSWER👀 3(21): - Represents or acknowledges fiduciary status
Renders the advice pursuant to a written or verbal
agreement, arrangement, or understanding that the
advice is based on the particular investment needs
of the advice recipient, or
Directs the advice to a specific advice recipient(s)
regarding the advisability of a particular investment
or management decision
Usually advises plan sponsor or investment
committee, but does not make decisions alone
3(38) - ANSWER👀 3(38):Has authority to make all investment changes
Discretion to manage, buy, or sell plan assets
(pooled accounts)
Manager of "managed accounts"
Broker/dealers and brokers cannot be an
Investment Manager
Identify ministerial functions performed by non-fiduciary service providers - ANSWER👀 •
Not exercising any discretionary control
• Ministerial in nature
• Day-to-day job of administering the plan
• Eligibility
• Calculation of benefits
, • Preparing Form 5500
Identify required and additional documentation for maintaining plan records according to
fiduciary best practice - ANSWER👀 Required: • Current, SIGNED plan
document/amendments and SPD
• IRS determination/opinion letter for plan
document
• Form 5500
• Fidelity bond
• Contribution/loan deposit confirmation
reports (timeliness of deposits)
• 408(b)(2) and 404(a)(5) disclosures
• Notices: Safe harbor, QDIA, blackout, etc.
Additional: • Meeting minutes/agendas/how
decisions were "prudently" made
• Investment policy statement
• Monitoring/benchmarking reports
• Service provider agreements/contracts
Explain service provider role in assisting with prudent process documentation -
ANSWER👀 actively participating in the decision-making process, providing detailed
information about their services, performance metrics, and fees, allowing the plan fiduciary
to thoroughly evaluate and document the rationale behind selecting a particular service
provider, thus demonstrating a prudent approach to managing the plan and mitigating
potential liability risks
OUTLINE FLASH CARDS WITH VERIFID
QUSTIONS AND ANSWERS COMPLETE
SOLUTIONS 100% VERIFIED!!| INSTANT PDF
DOWNLOAD
Differentiate investment advice and investment education - ANSWER👀 Education =
guidance to help others makes their OWN decisions
Advice: significant detail about an employee's personal finances, goals and risk tolerance
are gathered in order to make projections.
Describe the "best interest contract exemption" under the DOL fiduciary regulation -
ANSWER👀 The Best Interest Contract Exemption permits financial advisers (i.e., an
individual who is a representative of an investment adviser, broker-dealer, insurance
company, or bank or similar financial institution) and the financial institutions that employ
them to continue to rely on many current compensation and fee practices, as long as they
meet specific conditions intended to ensure that financial institutions mitigate conflicts of
interest and that they, and their financial advisers, provide investment advice that is in the
best interests of their customers.
Differentiate between 3(16), 3(21) and 3(38) fiduciaries - ANSWER👀 3(16): • Ensure plan
operates in accordance with ERISA
• Ensure plan follows its terms
• Provide participant notices/disclosures
• Sign and file Form 5500 (Annual return)
• Authorize distribution/loans
• Select and monitor service providers
• Ensure plan expenses are reasonable
,3(21) - ANSWER👀 3(21): - Represents or acknowledges fiduciary status
Renders the advice pursuant to a written or verbal
agreement, arrangement, or understanding that the
advice is based on the particular investment needs
of the advice recipient, or
Directs the advice to a specific advice recipient(s)
regarding the advisability of a particular investment
or management decision
Usually advises plan sponsor or investment
committee, but does not make decisions alone
3(38) - ANSWER👀 3(38):Has authority to make all investment changes
Discretion to manage, buy, or sell plan assets
(pooled accounts)
Manager of "managed accounts"
Broker/dealers and brokers cannot be an
Investment Manager
Identify ministerial functions performed by non-fiduciary service providers - ANSWER👀 •
Not exercising any discretionary control
• Ministerial in nature
• Day-to-day job of administering the plan
• Eligibility
• Calculation of benefits
, • Preparing Form 5500
Identify required and additional documentation for maintaining plan records according to
fiduciary best practice - ANSWER👀 Required: • Current, SIGNED plan
document/amendments and SPD
• IRS determination/opinion letter for plan
document
• Form 5500
• Fidelity bond
• Contribution/loan deposit confirmation
reports (timeliness of deposits)
• 408(b)(2) and 404(a)(5) disclosures
• Notices: Safe harbor, QDIA, blackout, etc.
Additional: • Meeting minutes/agendas/how
decisions were "prudently" made
• Investment policy statement
• Monitoring/benchmarking reports
• Service provider agreements/contracts
Explain service provider role in assisting with prudent process documentation -
ANSWER👀 actively participating in the decision-making process, providing detailed
information about their services, performance metrics, and fees, allowing the plan fiduciary
to thoroughly evaluate and document the rationale behind selecting a particular service
provider, thus demonstrating a prudent approach to managing the plan and mitigating
potential liability risks
