CPFA EXAM 2026 CERTIFICATION
EVALUATION TEST PAPER QUESTIONS
SOLUTIONS GRADED A PLUS
◉ Identify actions that might establish a fiduciary relationship.
Answer: assuming significant control over another person's
property or finances, having a high degree of trust and confidence
placed in you by another party, making decisions on behalf of
someone else with their best interests in mind, providing
professional advice in a field where expertise is required, managing
assets on behalf of another person, and entering into a legal
agreement where one party is explicitly designated as a fiduciary,
such as a trust or will.
◉ Identify named fiduciaries.
Answer: Persons or entities specifically
named in the plan document
◉ Explain roles and responsibilities of named fiduciaries.
Answer: Discretionary authority over
management or the
administration of the plan
,◉ Identify actions covered by the Best Interest Contract Exemption.
Answer: Acknowledge fiduciary status for itself and its financial
advisers;
Adhere to basic standards of impartial conduct, including: Giving
prudent advice that is in the customer's best interest (i.e., based on
the investment objectives, risk tolerance, financial circumstances,
and needs of the retirement investors, without regard to financial or
other interests of the financial institution or financial adviser);
Avoiding making misleading statements; and Charging no more than
reasonable compensation
Commit to the impartial conduct standards in an enforceable
contract when providing advice to an IRA owner
Implement policies and procedures reasonably and prudently
designed to prevent violations of the impartial conduct standards
Refrain from giving or using incentives for financial advisers to act
contrary to the customer's best interest
Fairly disclose the fees, compensation, and material conflicts of
interest associated with their recommendations.
◉ Differentiate investment advice and investment education.
Answer: Education = guidance to help others makes their OWN
decisions
Advice: significant detail about an employee's personal finances,
goals and risk tolerance are gathered in order to make projections.
, ◉ Describe the "best interest contract exemption" under the DOL
fiduciary regulation.
Answer: The Best Interest Contract Exemption permits financial
advisers (i.e., an individual who is a representative of an investment
adviser, broker-dealer, insurance company, or bank or similar
financial institution) and the financial institutions that employ them
to continue to rely on many current compensation and fee practices,
as long as they meet specific conditions intended to ensure that
financial institutions mitigate conflicts of interest and that they, and
their financial advisers, provide investment advice that is in the best
interests of their customers.
◉ Differentiate between 3(16), 3(21) and 3(38) fiduciaries.
Answer: 3(16): • Ensure plan operates in accordance with ERISA
• Ensure plan follows its terms
• Provide participant notices/disclosures
• Sign and file Form 5500 (Annual return)
• Authorize distribution/loans
• Select and monitor service providers
• Ensure plan expenses are reasonable
◉ 3(21).
Answer: 3(21): - Represents or acknowledges fiduciary status
Renders the advice pursuant to a written or verbal
EVALUATION TEST PAPER QUESTIONS
SOLUTIONS GRADED A PLUS
◉ Identify actions that might establish a fiduciary relationship.
Answer: assuming significant control over another person's
property or finances, having a high degree of trust and confidence
placed in you by another party, making decisions on behalf of
someone else with their best interests in mind, providing
professional advice in a field where expertise is required, managing
assets on behalf of another person, and entering into a legal
agreement where one party is explicitly designated as a fiduciary,
such as a trust or will.
◉ Identify named fiduciaries.
Answer: Persons or entities specifically
named in the plan document
◉ Explain roles and responsibilities of named fiduciaries.
Answer: Discretionary authority over
management or the
administration of the plan
,◉ Identify actions covered by the Best Interest Contract Exemption.
Answer: Acknowledge fiduciary status for itself and its financial
advisers;
Adhere to basic standards of impartial conduct, including: Giving
prudent advice that is in the customer's best interest (i.e., based on
the investment objectives, risk tolerance, financial circumstances,
and needs of the retirement investors, without regard to financial or
other interests of the financial institution or financial adviser);
Avoiding making misleading statements; and Charging no more than
reasonable compensation
Commit to the impartial conduct standards in an enforceable
contract when providing advice to an IRA owner
Implement policies and procedures reasonably and prudently
designed to prevent violations of the impartial conduct standards
Refrain from giving or using incentives for financial advisers to act
contrary to the customer's best interest
Fairly disclose the fees, compensation, and material conflicts of
interest associated with their recommendations.
◉ Differentiate investment advice and investment education.
Answer: Education = guidance to help others makes their OWN
decisions
Advice: significant detail about an employee's personal finances,
goals and risk tolerance are gathered in order to make projections.
, ◉ Describe the "best interest contract exemption" under the DOL
fiduciary regulation.
Answer: The Best Interest Contract Exemption permits financial
advisers (i.e., an individual who is a representative of an investment
adviser, broker-dealer, insurance company, or bank or similar
financial institution) and the financial institutions that employ them
to continue to rely on many current compensation and fee practices,
as long as they meet specific conditions intended to ensure that
financial institutions mitigate conflicts of interest and that they, and
their financial advisers, provide investment advice that is in the best
interests of their customers.
◉ Differentiate between 3(16), 3(21) and 3(38) fiduciaries.
Answer: 3(16): • Ensure plan operates in accordance with ERISA
• Ensure plan follows its terms
• Provide participant notices/disclosures
• Sign and file Form 5500 (Annual return)
• Authorize distribution/loans
• Select and monitor service providers
• Ensure plan expenses are reasonable
◉ 3(21).
Answer: 3(21): - Represents or acknowledges fiduciary status
Renders the advice pursuant to a written or verbal
