Question of the Week

An advisor has all client advisory fees automatically deducted from their accounts by the custodian.  Under this circumstance, the advisor is not considered to have custody of client funds if which of the following conditions are met?

I. The advisor sends the client a copy of the bill within 10 days after deduction from their account
II. The custodian sends the client a statement at least quarterly
III. The client has provided written authorization for the fees to be deducted
IV. The advisor sends the client the value of the assets and how the fee was calculated

A) I and III only
B) I, II and III
C) II, III and IV
D) I, II, III and IV

Answer: The correct answer is c)

An advisor is not deemed to have custody of client funds when debiting management fees from the client account directly if all of the following conditions are met:  the client must have provided written authorization to do so, the custodian agrees to send the client statements at least quarterly, and a copy of the bill and the manner in which the fee was calculated is provided to the client and custodian at the same time.

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.