Ethics Fiduciary

# Ethics & Fiduciary Obligations — Laws, Regulations & Guidelines Ethics and fiduciary duty questions appear throughout Section IV (Laws, Regulations & Guidelines), which carries 30% of the Series 65 exam (approximately 39 of 130 scored questions) [NASAA Series 65 Exam Content Outline, effective 2023-06-12]. Mastering the distinction between what advisers *must* do versus what is merely *prohibited* can easily be worth 5–8 questions on exam day. --- ## What Is Fiduciary Duty? An Investment Adviser (IA) and its Investment Adviser Representatives (IARs) are held to a fiduciary standard — the highest legal standard of care recognized in financial services. This is not merely a suggestion; it is an ongoing legal obligation that governs every aspect of the adviser-client relationship. Fiduciary duty has two core components: | Component | What It Requires | |---|---| | Duty of Care | Act in the client's best interest; make suitable recommendations based on full KYC (know your customer) information | | Duty of Loyalty | Put the client's interests ahead of your own; manage or disclose all conflicts of interest | Both duties are continuous — they do not apply only at the time of a transaction but throughout the entire advisory relationship. --- ## Conflict of Interest Management When a conflict exists between an adviser's interests and a client's interests, the adviser has two options, and the exam will test which one applies: 1. Eliminate the conflict entirely, OR 2. Fully disclose the conflict to the client so they can make an informed decision Simply disclosing a…