Communications, Fiduciary Ethics, Custody, Privacy and Continuity
The heaviest Series 66 topic tests communications, advisory contracts, compensation, conflicts, custody, discretion, suitability, AML, privacy, cybersecurity, and continuity.
How to study the Series 66
Treat the Series 66 as a dual-capacity exam: know the product, profile the client, then identify whether the person is acting as agent, adviser, or IAR.
Core concepts
Concept 1
Client communications, advertising, social media, websites, disclosures, unlawful registration representations, performance guarantees, and advisory contracts must avoid misleading conduct.
Exam cue: Ask what was said, charged, controlled, hidden, or conflicted.
Concept 2
Compensation, performance fees, pay-to-play, soft dollars, custody, discretion, prudent investor standards, suitability, AML, cross transactions, and conflicts require fiduciary analysis.
Exam cue: For custody and discretion, identify control over client funds, securities, or trading decisions.
Concept 3
Privacy, cybersecurity, business continuity, succession planning, personal securities transactions, political contributions, due diligence, and vulnerable-adult protections are core ethics topics.
Exam cue: For cybersecurity and continuity, choose documented protection and recovery procedures.
Risk pitfalls and guardrails
Treating disclosure as a cure for every conflict.
Guardrail: Avoid answers that blur capacity, skip disclosure, ignore custody, or give unlimited administrator power.
Calling performance guarantees acceptable if labeled hypothetical.
Guardrail: Avoid answers that blur capacity, skip disclosure, ignore custody, or give unlimited administrator power.
Ignoring privacy or continuity because the item looks like marketing.
Guardrail: Avoid answers that blur capacity, skip disclosure, ignore custody, or give unlimited administrator power.
Memory anchors
Disclosure
Disclosure should be full, fair, and timely enough for informed client consent.
Performance Guarantee
Advisers should not guarantee investment performance.
Advisory Contract
Advisory contracts must avoid impermissible terms and disclose material conditions.
Advertising Rule
Advertising and correspondence must avoid misleading claims.
Performance Fee
Performance fees are limited and must satisfy applicable rules.
Soft Dollars
Soft-dollar arrangements must fit eligible research or brokerage uses and be disclosed.
Custody
Custody means holding or having authority to obtain client funds or securities.
Trading Discretion
Discretionary authority requires proper authorization and supervision.
Fiduciary Duty
Fiduciary duty requires loyalty, care, and conflict management.
Privacy
Privacy rules protect nonpublic personal information.
Cybersecurity
Cybersecurity policies protect client information and firm systems.
Business Continuity
Continuity planning addresses disaster recovery and succession.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
An adviser considers whether it may guarantee a client a specific investment return. Which statement is accurate?
An adviser's advertisement includes a client testimonial. What general standard applies to such communications?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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