CPFA EXAM ACTUAL EXAM 2026/2027 | CERTIFIED PLAN
FIDUCIARY ADVISOR (CPFA) | NATIONAL ASSOCIATION OF PLAN
ADVISORS (NAPA) | ALL QUESTIONS AND CORRECT ANSWERS |
VERIFIED ANSWERS | UPDATED VERSION
Terms in this set (77)
Explain ERISA exclusive purpose and ERISA prudence The
Exclusive Purpose Rule: A fiduciary must act solely in the rule
best interest of plan
participants.
The Fiduciary Standard of Care: Prudence,
Loyalty, Diversification, Follow the Plan
Document
Identify actions that might establish a fiduciary assuming significant
control over another person's property or finances, having a relationship
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 Persons or
, entities
specifically
named in the
plan document
Explain roles and responsibilities of named fiduciaries Discretionary authority over
management or
the administration
of the plan
Identify actions covered by the Best Interest Contract Acknowledge fiduciary
status for itself and its financial advisers;
Exemption 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 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 The Best
Interest Contract Exemption permits financial advisers (i.e., an individual DOL
fiduciary regulation 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 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
FIDUCIARY ADVISOR (CPFA) | NATIONAL ASSOCIATION OF PLAN
ADVISORS (NAPA) | ALL QUESTIONS AND CORRECT ANSWERS |
VERIFIED ANSWERS | UPDATED VERSION
Terms in this set (77)
Explain ERISA exclusive purpose and ERISA prudence The
Exclusive Purpose Rule: A fiduciary must act solely in the rule
best interest of plan
participants.
The Fiduciary Standard of Care: Prudence,
Loyalty, Diversification, Follow the Plan
Document
Identify actions that might establish a fiduciary assuming significant
control over another person's property or finances, having a relationship
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 Persons or
, entities
specifically
named in the
plan document
Explain roles and responsibilities of named fiduciaries Discretionary authority over
management or
the administration
of the plan
Identify actions covered by the Best Interest Contract Acknowledge fiduciary
status for itself and its financial advisers;
Exemption 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 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 The Best
Interest Contract Exemption permits financial advisers (i.e., an individual DOL
fiduciary regulation 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 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
