Series 6 Customer Investment Profiles and Suitability practice questions

Correct answer: A. The obligations are cumulative, not alternative. A recommendation that passes reasonable-basis but fails customer-specific is still unsuitable.

Why not the others?
- B (The rep may choose which of the three obligations to satisfy): The rep does not choose. All three apply where they attach.
- C (Only one of the three applies per customer): All three can apply to the same recommendation. They are not mutually exclusive.
- D (The obligations apply only to variable annuity recommendations): The obligations apply to all recommendations subject to suitability, not only to variable annuities.

Correct answer: D. A hold recommendation uses the customer's current profile. The profile at original purchase does not control because circumstances may have changed.

Why not the others?
- A (Hold recommendations require written SEC approval; buy recommendations do not): Neither requires SEC pre-approval. Pre-approval is not the distinction.
- B (Hold recommendations are evaluated under the customer's profile at the time of the original purchase; buy recommendations use the current profile): The framing is reversed. Hold uses the current profile.
- C (Hold recommendations do not require reasonable-basis review; only customer-specific review): All three obligations still apply to hold recommendations.

Correct answer: C. Multiple rules apply together: Reg BI on the recommendation, the tool rule on the tool itself, and Form CRS per its delivery rules.

Why not the others?
- A (Only Reg BI applies; tool-related duties are suspended during recommendations): The tool disclosure rule applies to the tool and its disclosures separately. Reg BI applies to the recommendation. Both are in force.
- B (Only the tool disclosure rule applies; Reg BI is not triggered by tool-based meetings): Reg BI is triggered by recommendations to retail customers regardless of whether a tool was used.
- D (The meeting label of walk-through suspends all regulatory obligations): The label does not control. The recommendation triggers Reg BI, the tool rule applies to the tool, and Form CRS follows its delivery triggers.

Correct answer: B. The four component obligations are Disclosure, Care, Conflict of Interest, and Compliance. All four must be met.

Why not the others?
- A (Disclosure, Care, Compensation, Compliance): Compensation is not a component obligation. The third component is Conflict of Interest.
- C (Disclosure, Care, Conflict of Interest, Fiduciary): Fiduciary is a separate standard under the Advisers Act, not a Reg BI component.
- D (Suitability, Care, Conflict of Interest, Compliance): Disclosure is the first obligation, not suitability. Suitability is absorbed by the Care Obligation.

Correct answer: D. Form CRS is a plain-English relationship summary covering services, fees, conflicts, standards of conduct, and disciplinary history.

Why not the others?
- A (A contract that creates legal obligations between the firm and the customer): Form CRS is a summary, not a contract. It describes the relationship rather than creating new obligations.
- B (A prospectus delivered to retail investors before each recommendation): A prospectus is issued for securities offerings. Form CRS is a relationship summary about the firm, not about a particular security.
- C (An annual regulatory filing required from every customer): Form CRS is prepared by the firm, not the customer.

Correct answer: B. Tax-exempt interest is the core benefit of most municipal securities. A customer in a low bracket derives little value from the tax-exempt feature, making tax status outcome-determinative.

Why not the others?
- A (Because the MSRB requires tax returns to be filed with every recommendation): The MSRB does not require tax returns for every recommendation.
- C (Because municipal products always outperform corporate bonds after tax): Municipal products do not always outperform. The after-tax comparison depends on the customer's bracket.
- D (Because tax status determines the customer's risk tolerance): Tax status and risk tolerance are different profile factors. They are not reducible to each other.

Correct answer: C. Firm financial statements are not a required Form CRS section. The required sections are Introduction, Relationships and Services, Fees/Costs/Conflicts/Standards of Conduct, Disciplinary History, and Additional Information.

Why not the others?
- A (Introduction): Introduction is a required section.
- B (Relationships and Services): Relationships and Services is a required section.
- D (Disciplinary History): Disciplinary History is a required section.

Correct answer: B. Reg BI retail-customer status turns on use primarily for personal, family, or household purposes. Business-use does not meet that test, so the suitability rule may govern.

Why not the others?
- A (Is automatically a retail customer under Reg BI because they are a natural person): Retail customer status under Reg BI requires household-purpose use. A business-use recommendation may not meet that test.
- C (Is always treated as institutional, regardless of asset size): Institutional-customer treatment requires the $50M threshold or a listed categorical status.
- D (Has no regulatory standard apply to the recommendation): Reasonable-basis and, at minimum, customer-specific continue to apply under the suitability rule.