Series 66 STC REVIEW Correctly Answered Questions| UpToDate | Already Graded A+

Over the past 10 years, an investment adviser has developed a computerized trading algorithm that produces average returns of 30% per year. To recover the costs associated with development, the adviser now plans to charge clients an annual fee equal to 25% of their average balance. An Administrator would consider this fee: Unreasonable, since past performance is not indicative of future returns Reasonable based on average results from the past Unreasonable due to the significant amount of the gains being taken as compensation compared to normal fees from other advisers Reasonable, since the system is unique and not available from other investment advisers ☑: Performance-based fees are only available for qualified investors. Assessing a fee of 25% of the gains may be considered reasonable, but an asset-based fee of 25% would certainly be considered excessive. Generally, an asset-based fee exceeding 2% is considered excessive. According to the Employee Retirement Income Security Act, all of the following persons or entities would meet the definition of a fiduciary, EXCEPT: EXCELLENCE 2 The attorney who sets up the plan The investment adviser to the plan An individual who has discretion regarding the administration of the plan The trustee of the plan ☑: According to the Employee Retirement Income Security Act (ERISA), attorneys, accountants, and actuaries are not considered fiduciaries when acting solely in their professional capacities. Numerous activities involving the retirement plan require a person to act as a fiduciary, that is, to act in the best interests of others. A person who has discretion over the administration of the plan, or who manages the assets of the plan, is responsible for fulfilling the obligations of a fiduciary. Additionally, some activities are business decisions rather than fiduciary actions. Whether a plan will be established for employees and the benefits provided are business decisions.