CIMA Ethics & Investment Consulting Process

Question 1

What is the primary responsibility of a fiduciary advisor?

Accepted Answer

Act in the client’s best interest

Answer

Maximize firm profitability

Answer

Promote high-commission products

Answer

Increase trading activity

Question 2

What is the first step in the investment consulting process?

Accepted Answer

Establish the client-advisor relationship

Answer

Analyze performance metrics

Answer

Design asset allocation

Answer

Implement portfolio strategies

Question 3

Why is full disclosure important in an ethical investment advisory relationship?

Accepted Answer

To maintain transparency and client trust

Answer

To comply with tax laws

Answer

To increase product sales

Answer

To avoid legal conflicts

Question 4

Which standard requires that advisors must not mislead or deceive clients?

Accepted Answer

Duty of honesty and integrity

Answer

Duty of loyalty

Answer

Duty of care

Answer

Duty of prudence

Question 5

What is the purpose of an Investment Policy Statement (IPS) in the consulting process?

Accepted Answer

To establish investment objectives and guidelines

Answer

To detail advisor compensation

Answer

To track market forecasts

Answer

To summarize tax strategies

Question 6

What is a key ethical concern when offering proprietary products?

Accepted Answer

Conflict of interest

Answer

Product availability

Answer

Client's income level

Answer

Lack of product features