mhaven.net Licensing Requirements by Monica Haven, E.A., J.D., - - PowerPoint PPT Presentation
mhaven.net Licensing Requirements by Monica Haven, E.A., J.D., L.L.M. Not that kind of license! Must be male and female, at least 18 years of age mhaven.net Not nearer of kin than second cousins Not having another living husband or
by Monica Haven, E.A., J.D., L.L.M.
Must be male and female, at least 18 years of age Not nearer of kin than second cousins Not having another living husband or wife Divorces must be final in the state where granted Must have at least one witness at ceremony Both parties must appear at License Bureau No waiting period; no blood tests License fee is $60
The client…
address tax implications The practitioner…
the next decade (much faster than the average for all occupations).
Establish scope of the engagement Gather data [see Document Checklist, p.19] Identify client’s financial (& other) goals Establish a baseline Perform needs, portfolio, & tax analyses Adjust client’s goals, if necessary Formulate the financial plan Implement and coordinate plan Always monitor and update plan
client’s employment)
Service Type Pros Cons Financial Planner No conflict of interest Full-time attention required FP Representative Not responsible for investment performance Perceived as lacking competence Client pays extra for advice AND implementation Fee-Only Advisor Easy adjunct to practice No FINRA license required No B/D affiliation required Eventually full-time Commission-Based $/hour higher FINRA license & oversight Agent of B/D Unable to gain full overview Perceived as biased Cannot charge fees 2nd Opinion Offers peace of mind No LT relationship Discretionary Authority Minimal client involvement Time purchases and sales Advisor assumes liability May be accused unsuitable trades Additional record-keeping
Registered Investment Advisor
state unless exempt (< 15 clients/12-month period)
engineer, or teacher & advice is incidental
state-licensed Registered Representative
Insurance Agent
but must adhere to Suitability Standard
Standard (but is till an agent of the B/D)
Common adviser problems Type of controversy 2005 complaints Percentage of total Breach of fiduciary duty 3,514 23.10% Negligence 2,225 14.60% Breach of Contract 1,987 13.10% Unsuitability 1,926 12.70% Failure to supervise 1,828 12.00% Misrepresentation 1,826 12.00% Omission of facts 1,123 7.40% Unauthorized trading 395 2.60% Churning 315 2.10% Margin calls 78 0.50% Online trading 7 0.00%
Source: National Association of Securities Dealers
Federal
State
& expertise
Series Exam Title Questions Time
6 Investment Company & Variable Contracts Limited Rep 100 2 ¼ 7 General Securities Rep 250 6 24 General Securities Principal 150 3 ½ 63 Uniform Securities Agent State Law 60 1 65 Uniform Investment Advisor Law 130 3 66 Combined State Law 100 2 ½
Investment Advisors Act of 1940
Investment Advisor Release 1092 of 1987
Uniform Prudent Investors Act of 1994
Securities Act of 1933
Securities and Exchange Act of 1934
National Securities Markets Improvement Act of 1996
Rule 405
CFP Board of Standards
recommendations
Open-end must redeem shares at NAV within a. 3 business days using Regular Way settlement rules of the NASD b. 7 days under the Act of 1940 c. 5 business days under Regulation T of the Securities Act of 1934 d. whatever date is declared by the Board of Directors of the investment company investment companies Investment Company
The XYZ Fund is quoted at $13 Bid and $14 Ask. The prospectus states that there is a 1% redemption fee. A customer redeeming 2,000 shares would receive net proceeds of a. $25,740 b. $26,000 c. $27,720 d. $28,000
(2000 shares X $13/share) – 1% = $26,000 – 260 = $25,740
An investor studying an annual report of the DEF Investment Company sees that the net asset value is up from $12.16 to $12.97/share and that the selling price is down. What type of fund is it? a. balanced fund b.
c. closed-end fund d. any mutual fund which has operated in a declining market NAV SP But where SP is based on NAV (plus Sales Load) in open-end fund, SP must rise when NAV rises. Here, it does not and so this must be a closed-end fund.
A security may be registered in a state by a. coordination b. notification c. qualification d. any method, on the state An agent or broker/dealer may be subject to a. revocation or suspension b. criminal liability c. civil liability d. all of the above depending
Under the Uniform Securities Act, the burden of proof for an from securities registration is upon the a. agent selling the security b. broker/dealer selling the security c. investment banker underwriting the security d. issuer claiming the exemption exemption
In accordance with the Telephone Consumer Protection Act of 1991, a person making phone solicitations disclose which of the following? I. name of the caller II. the specific security the caller wishes to discuss III. the name of the organization the caller represents IV. the telephone number and address where the caller may be reached a. I and III only b. II, III and IV only c. I, III and IV only d. I, II, III and IV must
III appears in all answers, so disregard and focus on I, II and IV… I is a matter of course, so that eliminates “b” IV seems logical in an era of privacy protection, so that eliminates “a” But MUST II be disclosed? No.
Under NASD Rules of Fair Practice, which of the following could possibly be considered violations? a. excessive customer activity in a cash account b. unusually high sales of speculative, low-priced securities through
c. short-term trading of mutual funds that had a sales load d. all of the above The federal law that provides for insuring customer accounts in the event of a brokerage firm’s bankruptcy is the a. 1933 Securities Act b. 1934 Securities Exchange Act c. 1964 Security Act Amendments d. Securities Investors’ Protection Act of 1970
Which of the following is the correct justification for use of an investment in a client’s portfolio? a. NMA securities because they are backed by the full faith and credit of the U.S. government b. Call purchases because they are a low-cost method of hedging a portfolio c. Blue chip common stocks because they provide a hedge against inflation d. Aggressive growth stocks because they better during economic contractions F
perform
Jorge is single and owns $30,000 of stock he originally purchased 4 years ago for $7,000. His adjusted gross income (AGI) is $40,000. If Jorge donates the stock to his church, which of the following is the maximum amount he can deduct as a charitable contribution for this gift on his federal income tax return this year? a. $12,000 b. $15,000 c. $20,000 d. $30,000 Donation of capital gain property limited to 30% of AGI… $40,000 X 30% = $12,000 maximum deduction (carry-forward remainder)
services, strengthen your relationships, and make money on the same account)
can get more than just tax referrals)
the ability and willingness to teach them)
arrangements are not disclosed)