Free CFP Exam Professional Conduct and Regulation Practice Questions

CFP® professionals must act as fiduciaries when providing both financial planning and financial advice. The CFP Board's Standards of Conduct require the fiduciary duty to apply at all times when these services are rendered, not just during formal financial planning engagements.
Choice D is incorrect because the duty extends beyond just financial planning.
Choice B is incorrect because it excludes financial planning, which also triggers fiduciary duty.
Choice C is incorrect because the fiduciary obligation is automatic under CFP Board standards and does not require a separate agreement.

Under the Investment Advisers Act of 1940 as amended by Dodd-Frank, investment advisers with less than \$100 million in AUM generally register with state securities regulators rather than the SEC. Advisers managing between \$100 million and \$110 million may elect to register with either. With \$85 million in AUM, this adviser must register with the state regulator. FINRA does not regulate investment advisers — it regulates broker-dealers and their registered representatives.

When a dually registered adviser is in a financial planning engagement, the fiduciary standard applies to all recommendations made in that context, including product transactions. The context of the engagement — not the type of transaction — determines the governing standard.
Choice A is incorrect because Reg BI governs broker-dealer recommendations outside of a fiduciary relationship; within a planning engagement, the higher fiduciary standard applies.
Choice C is incorrect because share class selection directly affects client costs and returns, making it a substantive recommendation, not an administrative matter.
Choice B is incorrect because a CFP® professional cannot selectively apply a lower standard to avoid fiduciary obligations during an active planning engagement.