BASIC FINANCIAL PLANNING SKILLS,
THE FINANCIAL PLANNING
PROFESSION, AND REGULATORY
REQUIREMENTS TEST GUIDE Q&A
Which of the following regarding the Securities Act of 1933 and the Securities Exchange
Act of 1934 is true?
a. The Securities Act of 1933 regulates the primary and secondary markets and the
Securities Exchange Act of 1934 establishes the Securities and Exchange Commission
(SEC).
b. The Securities Act of 1933 and the Securities Exchange Act of 1934 establish the
primary and secondary markets and hold broker dealers and their representatives to
fiduciary standards.
c. Both Acts create the primary and secondary markets and establishes the Securities
and Exchange Commission (SEC), Internal Revenue Service (IRS), and Department of
Labor (DOL).
d. The Securities Act of 1933 regulates the primary markets, whereas the Securities
Exchange Act of 1934 regulates the secondary markets and established the Securities
and Exchange Commission (SEC). - Answer-d. The Securities Act of 1933 regulates the
primary markets, whereas the Securities Exchange Act of 1934 regulates the secondary
markets and established the Securities and Exchange Commission (SEC).
The Securities Act of 1933 regulates new issues of investment securities and requires
public offerings to be registered with the Securities and Exchange Commission (SEC).
Financial planners are prohibited from making untrue or misleading statements in
documents they prepare for registration with the SEC. The Securities Exchange Act of
1934 regulates the purchase and sale of investment securities in the market and
establishes liability for making false or misleading statements in reports filed with the
SEC, trading on nonpublic material information without disclosure, and using
manipulative or deceptive devices in connection with the sale or purchase of a security.
The Investment Advisers Act of 1940 established which of the following?
a. suitability standards for stockbrokers providing advice incidental to the sale of
securities
b. fiduciary standards for stockbrokers and investment advisers providing advice
incidental to the sale of securities
c. suitability standards for stockbrokers and investment advisers providing advice
incidental to the sale of securities
, d. fiduciary standards for investment advisers providing advice related to securities -
Answer-d. fiduciary standards for investment advisers providing advice related to
securities
An investment adviser is defined as any person who, for compensation and as part of a
regular business, engages in the business of advising others on the value of securities
or on the advisability of investing in or selling them. The advice can be delivered in
person, through publications or writings, or through research reports concerning
securities. Note that investment advisers are held to fiduciary standards and are paid a
fee for advice, whereas stockbrokers are held to suitability standards and paid
commissions related to the sale of securities.
An advisor offering both the sale of securities and advice related to the sale of those
securities must do which of the following?
a. Register with the SEC only.
b. Register with the SEC, FINRA, the CFP Board, and their state(s) of business.
c. Register with either the SEC or FINRA depending on the primary business.
d. Register with the SEC, FINRA, and their state(s) of business. - Answer-d. Register
with the SEC, FINRA, and their state(s) of business.
An advisor who provides both investment advice and sales of securities related to the
investment advice is considered to be a dual-advisor and must, therefore, register with
the SEC, FINRA, and their state(s) of business. CFP Board is a designation that
advisors use to distinguish themselves, but they do not regulate the sale of securities or
investment advice.
Who is/are the primary regulators of the financial planning profession?
a. SEC, FINRA, Department of Labor (DOL), and individual states
b. SEC, FINRA, Department of Labor (DOL), individual states, and CFP Board
c. Individual states
d. SEC only - Answer-a. SEC, FINRA, Department of Labor (DOL), and individual states
The SEC, FINRA, Department of Labor (DOL), and individual states are all regulators of
the financial services industry. The CFP Board is designation that advisors use to
distinguish themselves, but they do not regulate the sale of securities or investment
advice.
Registered Investment Advisor Firms (RIAs) are required to register with the SEC if
a. they manage between $0 - $50 million in assets.
b. they manage $100 million in assets or more.
c. they manage between $25 - $75 million in assets.
d. they must register if they manage any assets at all. - Answer-b. they manage $100
million in assets or more.
THE FINANCIAL PLANNING
PROFESSION, AND REGULATORY
REQUIREMENTS TEST GUIDE Q&A
Which of the following regarding the Securities Act of 1933 and the Securities Exchange
Act of 1934 is true?
a. The Securities Act of 1933 regulates the primary and secondary markets and the
Securities Exchange Act of 1934 establishes the Securities and Exchange Commission
(SEC).
b. The Securities Act of 1933 and the Securities Exchange Act of 1934 establish the
primary and secondary markets and hold broker dealers and their representatives to
fiduciary standards.
c. Both Acts create the primary and secondary markets and establishes the Securities
and Exchange Commission (SEC), Internal Revenue Service (IRS), and Department of
Labor (DOL).
d. The Securities Act of 1933 regulates the primary markets, whereas the Securities
Exchange Act of 1934 regulates the secondary markets and established the Securities
and Exchange Commission (SEC). - Answer-d. The Securities Act of 1933 regulates the
primary markets, whereas the Securities Exchange Act of 1934 regulates the secondary
markets and established the Securities and Exchange Commission (SEC).
The Securities Act of 1933 regulates new issues of investment securities and requires
public offerings to be registered with the Securities and Exchange Commission (SEC).
Financial planners are prohibited from making untrue or misleading statements in
documents they prepare for registration with the SEC. The Securities Exchange Act of
1934 regulates the purchase and sale of investment securities in the market and
establishes liability for making false or misleading statements in reports filed with the
SEC, trading on nonpublic material information without disclosure, and using
manipulative or deceptive devices in connection with the sale or purchase of a security.
The Investment Advisers Act of 1940 established which of the following?
a. suitability standards for stockbrokers providing advice incidental to the sale of
securities
b. fiduciary standards for stockbrokers and investment advisers providing advice
incidental to the sale of securities
c. suitability standards for stockbrokers and investment advisers providing advice
incidental to the sale of securities
, d. fiduciary standards for investment advisers providing advice related to securities -
Answer-d. fiduciary standards for investment advisers providing advice related to
securities
An investment adviser is defined as any person who, for compensation and as part of a
regular business, engages in the business of advising others on the value of securities
or on the advisability of investing in or selling them. The advice can be delivered in
person, through publications or writings, or through research reports concerning
securities. Note that investment advisers are held to fiduciary standards and are paid a
fee for advice, whereas stockbrokers are held to suitability standards and paid
commissions related to the sale of securities.
An advisor offering both the sale of securities and advice related to the sale of those
securities must do which of the following?
a. Register with the SEC only.
b. Register with the SEC, FINRA, the CFP Board, and their state(s) of business.
c. Register with either the SEC or FINRA depending on the primary business.
d. Register with the SEC, FINRA, and their state(s) of business. - Answer-d. Register
with the SEC, FINRA, and their state(s) of business.
An advisor who provides both investment advice and sales of securities related to the
investment advice is considered to be a dual-advisor and must, therefore, register with
the SEC, FINRA, and their state(s) of business. CFP Board is a designation that
advisors use to distinguish themselves, but they do not regulate the sale of securities or
investment advice.
Who is/are the primary regulators of the financial planning profession?
a. SEC, FINRA, Department of Labor (DOL), and individual states
b. SEC, FINRA, Department of Labor (DOL), individual states, and CFP Board
c. Individual states
d. SEC only - Answer-a. SEC, FINRA, Department of Labor (DOL), and individual states
The SEC, FINRA, Department of Labor (DOL), and individual states are all regulators of
the financial services industry. The CFP Board is designation that advisors use to
distinguish themselves, but they do not regulate the sale of securities or investment
advice.
Registered Investment Advisor Firms (RIAs) are required to register with the SEC if
a. they manage between $0 - $50 million in assets.
b. they manage $100 million in assets or more.
c. they manage between $25 - $75 million in assets.
d. they must register if they manage any assets at all. - Answer-b. they manage $100
million in assets or more.
