CPFA (Actual) Exam Solved 100% Correct (Set of 162 questions)
Question : Under the DOL regulation, many advisors to
retirement plans and their participants will be
CORRECT ANSWER : 3(21) fiduciaries. They will act
alongside other fiduciary service providers who are also not necessarily named in the plan document but who exercise discretionary control over plan provisions or plan investments.
Question : The advisor should educate the
CORRECT ANSWER : plan sponsor about hiring fiduciary
service providers, including the different roles service providers, including the different roles service providers may take on within the plan, how to select a qualified candidate, and the plan sponsor's ongoing responsibility to monitor them.
Question : The fiduciary definition has two parts:
CORRECT ANSWER : who is a fiduciary to what extent the
person is a fiduciary Clarifying fiduciary status is arguably incomplete without addressing both.
Question : A best practice for a service provider's formal
description of services might therefore include two parts:
CORRECT ANSWER : a. an acknowledgment of fiduciary
status b. clarification as to the extent of responsibilities
Question : As a non-fiduciary advisor, you can
CORRECT ANSWER : educate your client and present
possible investments for the Retirement Plan Committee consideration.
Question : If you recommend a specific fund replacement to
the plan sponsor or plan participants, you are considered to be
CORRECT ANSWER : giving investment advice and are
therefore a functional fiduciary to the plan.
Question : If fiduciaries of participants use your
recommendations - as opposed to information - to make investment decisions, this could be considered
CORRECT ANSWER : a fiduciary act
Question : As a non-fiduciary advisor, you can meet with
your client on a recurring basis (quarterly, annually, etc) if providing
CORRECT ANSWER : general investment reports or
discussing the appropriateness of the investments to the plan without making specific investment suggestions.
Question : Plan fiduciaries will almost always have to hire
CORRECT ANSWER : service providers for their plan
under their ERISA "duty to obtain expert assistance."
Question : As a best practice, the advisor can help fiduciaries
select:
CORRECT ANSWER : the service providers, which usually
includes a TPA and a record keeper.
Question : In owner driven smaller plans, the advisor can
assist the
CORRECT ANSWER : plan sponsor's HR staff - which is
likely to be one person in working with the various plan service providers.
Question : In larger participant driven plans, the advisor can
work with
CORRECT ANSWER : the HR director, CFO, and the
retirement plan committee to evaluate service providers.
Question : A 3(21) fiduciary does not serve as a fiduciary
investment manager, but instead usually as
CORRECT ANSWER : investment advice fiduciary
Question : If your client wants an advisor to manager plan
investments, or just the QDIA, they can hire a