Question of the Week

Your firm is a registered investment advisor that specializes in investment management with 400 clients across all 50 states. Your firm has no certified public accountants on staff. However, you are a CFP and one of your clients calls you to file his 1040 IRS tax form. Although you are not a CPA, you have filed your own return for the last 10 years and are quite knowledgeable on the subject. You should do which of the following?

A) Call a friend of yours that is a CPA, and split the account fee with him to file the return
B) Recommend that the client seeks a certified public accountant in his area
C) Under your fiduciary duty, you should file the return for your client
D) Ask the client to fax you his tax documents, and help him electronically file his return


The correct answer is b:

As a professional, you must be able to recognize when clients make requests for services that are beyond the scope of your expertise. You should then advise them to seek the help of a more qualified professional in that field.

Professionals FAQs
  1. Where can I look for a financial planner?

    References from trusted friends or family members can help you find a financial planner; however, keep in mind that your friends' financial situations and goals may differ from yours and, therefore, their planners won't necessarily be the best fit for you.The Certified Financial Planner (CFP) Board of Standards certifies financial planners and maintains an online list of certified financial planners on its CFP Board of Standards website.
  2. If I am looking to get an Investment Banking job. What education do employers prefer? MBA or CFA?

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The caveat here is that the MBA would most probably need to be from a Top-20 B-School.The Chartered Financial Analyst (CFA) is well worth considering if you (a) are aiming for an entry-level position in investment banking, and/or (b) cannot afford to shell out six figures for an MBA or have to settle for a lesser-known B-school.That's because in the investment banking field, most entry-level positions are at the analyst level.
  3. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't count on it. The CFA Institute has long emphasized that ethics is a particular area of focus for it. The seriousness with which the CFA Institute views ethics is evident from the fact that for exam candidates with borderline total scores, performance on the ethics section can mean the difference between passing and failing the exam.
  4. Under the USA, registration as an IAR includes all of the following EXCEPT:

    Under the USA, registration as an IAR includes all of the following EXCEPT: A. Minimum net capitalB. Passing a qualification examC. Filing a consent to service of processD. Posting a surety bond The correct answer is "A", since only an IA would need to prove minimum net capital requirements.