Ethics Fiduciary

# Ethics & Fiduciary Duty — Series 66 ## Why This Matters Ethics and fiduciary duty are tested within Section IV (Laws, Regulations & Guidelines), which carries 45% of the Series 66 exam — approximately 45 of 100 scored questions. [Source: NASAA Series 66 Exam Content Outline, effective 2023-06-12; series66/topic_weights/laws_regulations] Because the Series 66 qualifies candidates as both investment adviser representatives (IARs) and securities agents, you must understand two different conduct standards and know which one applies in a given situation. This is the "dual-hat" challenge unique to Series 66 candidates. --- ## The Fiduciary Standard: Investment Adviser Representatives When acting in an investment advisory capacity, an IAR is held to a fiduciary standard — the highest legal standard of care in financial services. This is not optional or aspirational; it is a legal obligation under the Investment Advisers Act of 1940 and state law. ### Two Components of Fiduciary Duty | Component | What It Requires | |---|---| | Duty of Care | Act in the client's best interest; make suitable recommendations based on full knowledge of the client's financial situation, goals, risk tolerance, and time horizon | | Duty of Loyalty | Put the client's interests ahead of your own or the firm's; manage or disclose all conflicts of interest | Both duties are continuous throughout the entire advisory relationship — not just at the point of a transaction. --- ## Conflict of Interest Management When a conflict exists between the adviser's interests and the client's interests: 1. Eliminate the…