Ch 6 IA Practices Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

Do BDs have to disclose conflicts of interest?

A

No. The only requirement is that the recommendation is suitable

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2
Q

Uniform prudent investor act (UPIA):

A
  • Used as a guide for securities that can be recommended based on modern portfolio theory. It considers what is suitable considering diversification, risk tolerance, etc
  • No specific types of investments prohibited. Any investment could be appropriate, even risky one if the risk/reward profile is suitable
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3
Q

Soft dollar arrangements:

A
  • IA may pay higher commissions for a trade in return for soft dollars from a BD. -
  • Hard dollars are cash where as soft dollars are research reports, analysis, seminars, software, etc.
  • The logic is that these things benefit the client. IA cannot receive things like hardware, travel, entertainment, rent, etc.
  • must disclosure on ADV part 2
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