IACCP (MASTER TERMS) | 156 QUESTIONS AND CORRECT ANSWERS

minimus) Define a “client” according to The Adviser’s Act ANSWER-1) a natural person, and: (i) any minor child; (ii) any relative, spouse, or relative of spouse having same residence; (iii) all accounts of which the person is the only primary beneficiary; and (iv) all trusts of the person or of which the person is the only primary beneficiary; 2) A corporation, general partnership, limited partnership, LLC, trust, or other legal org receiving advice based on investment objectives rather than individual objectives of shareholders/partners/etc. INCLUDING two or more legal orgs having identical owners Define “Suitability” ANSWER-Recommendations in light of a clients experience, situation and objectives Describe the characteristics of fulfilling suitability obligation ANSWER-Render disinterested/impartial advice, exercise high degree of care to ensure adequate and accurate recommendations/info is presented, and prior due diligence on holdings selected Describe 3 requirements related to client investment objectives/restrictions ANSWER-Advisor must: 1) match portfolio decisions with client mandates, 2) create and maintain client profile, 3) execute investment advisory agreement What is the goal of the Safe Harbor Rule? ANSWER-To provide certain investment advisory programs (such as wrap fees, model accounts and others having similar objectives and investments traded simultaneously with all clients being treated similarly) a non-exclusive safe harbor from the definition of an investment company and from being deemed to be a mutual fund, therefore requiring registration as such. What conditions must be met for a program to qualify for the Safe Harbor Rule? ANSWER-1. Each account within the program received individualized treatment (managed according to each client’s specifics); 2. Client specific information is obtained by each upon account openings; 3. Annual contact confirming no changes; 4. Advisor to notify clients quarterly (a reminder) requesting contact if any changes apply; 5. Advisor consultation reasonably accessible to clients; 6. Ability to impose reasonable restrictions, such as specific securities or sectors; 7. Quarterly statements to clients reporting all activity; and 8. Indication of securities ownership retained by each client Disclosure requirements for Mutual Funds managed within program qualifying for Safe Harbor ANSWER-1. Clients will pay advisory fees and fund expenses at the mutual fund level in addition to any account fees; and 2. MFs may be purchased directly without advisory services