NASAA Series 65, Uniform Investment Adviser Law ExaminationLaws, Regulations, and Guidelines, including Prohibition on Unethical Business PracticesEasy
An investment adviser (IA) has established a policy that all client complaints, regardless of their nature, must be logged, investigated, and resolved within 30 days. This proactive approach to handling complaints primarily aligns with the IA's adherence to which of the following regulatory principles?
- AFiduciary Duty.
- BMarket Manipulation Prevention.
- CNet Worth Requirements.
- DInsider Trading Prohibitions.
Show answer & explanationAnswer & explanation
Correct answer: A. Fiduciary Duty.
Prompt and fair handling of client complaints is a core aspect of an investment adviser's fiduciary duty, demonstrating a commitment to acting in the client's best interest and maintaining trust.
Why the other options are wrong
- B. Market manipulation relates to artificial influence on security prices, not complaint handling.
- C. Net worth requirements ensure financial stability, not ethical treatment of client complaints.
- D. Insider trading involves using non-public information for personal gain, unrelated to complaint handling.
Client Complaint Handling & Fiduciary Duty
The prompt, fair, and thorough handling of client complaints by an investment adviser is a direct manifestation of their fiduciary duty to act in the best interests of their clients.
- Fiduciary duty requires acting in client's best interest.
- Complaint resolution builds and maintains client trust.
- Failure to address complaints can breach fiduciary duty.
- Regulatory bodies often require complaint logs and procedures.
Memory trick: Care, Loyalty, and Transparency with Clients!