Study fiduciary duty, compensation issues, custody, discretion, conflicts, privacy, cybersecurity, and business continuity tested in the largest legal section of Series 65.
This is the ethical core of Series 65. NASAA expects candidates to understand that advisers and IARs operate under fiduciary and conflict-management duties that reach into compensation, performance fees, custody, discretion, confidentiality, insider trading, outside accounts, political contributions, soft dollars, business continuity, and more. The rule set is broad because the adviser relationship is broad.
The best way to read these questions is to ask one central question: does the arrangement put the adviser’s interest ahead of the client’s or weaken the client’s ability to receive fair, well-governed advice? If yes, a fiduciary or conflict issue is likely present.
Why does Series 65 group custody, compensation, and conflicts together in the same domain?
A. Because they are unrelated operational topics
B. Because each can create a situation where adviser incentives or control over client assets threatens fiduciary treatment
C. Because advisers never owe confidentiality once compensation is disclosed
D. Because custody rules matter only to broker-dealers
Answer: B. Series 65 treats these topics as connected because each can undermine fair, loyal, and well-controlled treatment of the client if handled poorly.