Chapter 11: Code of Professional Conduct Flashcards
Advertising includes all forms of communication whether oral, written, or electronic.
True or False?
True
Professional services include providing advice, recommendations, or opinions related to a retirement plan.
True or False?
True
An ARA Member may disclose to another ARA Member confidential information learned about a client whenever asked by another ARA Member.
True or False?
False. An ARA Member may only disclose confidential information about a client if the client has authorized the Member to do so.
The ARA Code of Professional Conduct shall override IRS Circular 230.
True or False?
False. The ARA Code of Professional Conduct is not intended to supplant, contradict, or supersede Law (e.g., IRS Circular 230). Where the requirements of Law or such governmentally-sanctioned Codes conflict with this Code, the requirements of Law or such governmentally-sanctioned Codes take precedence.
An ARA Member who has the education, training, and experience to advise a client regarding the benefits of a cash balance plan versus a target benefit plan may do so.
True or False?
True
An ARA Member who is found guilty of a felony shall be subject to ARA’s disciplinary procedures.
True or False?
True
An ARA Member may provide professional services to a client who requests it even though the client is being served by another professional in the same manner.
True or False?
True
If a request for information is received by an ARA Member from a person authorized by ARA to obtain information regarding a possible violation of the ARA Code of Professional Conduct, the Member shall respond promptly in writing.
True or False?
True
A credential is a membership designation conferred by ARA.
True or False?
True
Confidential information may include information which the ARA Member has reason to believe that the client would not wish to be divulged.
True or False?
True
Which of the following is not a violation of ARA’s Code of Professional Conduct?
A. Advertising that the Member is a CPC when the member has not received the designation from ARA.
B. Orally informing a potential client that the Member’s firm administers 1,500 401(k) plans when in reality it administers only 300.
C. On the Member firm’s website advertising that the firm is qualified to administer ESOP plans when the firm has never administered one.
D. Providing a potential client written material that indicates any potential income it may receive from investment products that are purchased by the plan.
D. Providing information regarding income a firm receives from investments or from relationships it may have with other service providers is not a violation of the ARA Code of Professional Conduct.
Which of the following is not a violation of ARA’s Code of Professional Conduct?
A. After attending a client’s confidential board meeting, you inform a friend that the client will merge with another firm so the friend can sell the company stock.
B. Your client requests that you provide another service provider participant account balance details and you do so electronically based on the new service provider’s specifications.
C. You discuss your client’s salary information with a friend interested in working for the client.
D. The President of the company you administer a profit-sharing plan for, notified you that he would be informing the board next week that he is retiring, and you repeat the information today to a shareholder.
B. It is not a violation of the ARA Code of Professional Conduct to provide information that a client has requested that you provide.
Which of the following statements regarding conflict of interest requirements under ARA’s Code of Professional Conduct is/are TRUE?
1. The Member shall fully disclose any actual conflict of interest to a client.
2. The Member’s ability to act fairly must be unimpaired.
3. The Client must expressly agree to the services that are provided by the Member.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2, and 3
D. All statements are True.
Which of the following statements regarding ARA’s Code of Professional Conduct is NOT TRUE?
A. An ARA Member shall render opinions or advice only when qualified to do so based on education, training, and experience.
B. An ARA Member must adhere to the high standards of conduct, practice, and qualification.
C. An ARA Member must abide by the ARA Code of Professional Conduct regardless of other laws.
D. An ARA Member shall take reasonable steps to ensure that services rendered under the Member’s supervision are performed with honesty, integrity, skill, and care.
C. Laws may impose binding obligations on a Member. The ARA Code of Professional Conduct is not intended to contradict or supersede the law.
Which of the following statements is/are violations of ARA’s Code of Professional Conduct?
*Your client has informed you that they are having cash flow issues and are not going to deposit employee 401(k) contributions into their 401(k) plan for six months so that they can use the funds to help meet their payroll obligations.
*There are 50 participants in their 401(k) plan.
- You advise the client that this will result in a loan from the plan to the plan sponsor and is a prohibited transaction.
- You advise the client that the employee contributions must be deposited to the plan within seven business days from when they would have been paid to the participants.
- You listen to the client’s concern with empathy, discuss how difficult it is for a small business to comply with the additional expenses generated by the new health care laws and concur with their course of action to solve their cash flow issues.
A. 1 only
B. 3 only
C. 1 and 2 only
D. 2 and 3 only
B. The course of action the client has discussed in statement 3 would be a violation an ARA Member would want to avoid.