Practice Quiz

FINRA Series 63 (NASAA)

Category - Series 63

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Which of the following may an investment adviser not use in an attempt to solicit new clients?
  1. testimonials of satisfied clients
  2. a complete list of the stocks they have recommended in the past year, even if a statement is included that states that past performance is no guarantee of future performance
  3. a free initial consultation, with no obligation on the part of the potential client
  4. a free financial planning kit, with no obligation on the part of the potential client
Explanation
Answer: A - Investment advisers may not use testimonials of satisfied clients to solicit new clients. They may provide past stock picks, as long as they provide a complete list, that compilation period for the list is at least a year, and as long as they are careful to note that past performance is no guarantee of future performance. They can also offer freebies, such as a free initial consultation or a free financial planning kit, as long as these are indeed offered “free,” with no obligation on the part of the client.
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