LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A client asks the agent to invest in a private business deal alongside them. The agent should:
- AInvest alongside the client, since a shared investment aligns the agent's interests with the client's
- BInvest if the deal is clearly profitable, since the agent's duty is only to avoid arrangements that harm the client
- Decline; personal financial dealings with clients create unmanageable conflicts and are typically barred
- DBorrow from the client instead, since a loan is a simpler arrangement than a joint investment
Correct answer: C) Decline; personal financial dealings with clients create unmanageable conflicts and are typically barred
Financial dealings with clients undermine independence and are a discipline hotspot.
Why the other options are wrong
- AInvesting with a client is a conflict of interest.
- BProfitability does not cure the conflict.
- DBorrowing from a client is also prohibited.
Exam tip
No personal financial dealings with clients.
Common mistake
Lending money to a client in difficulty.
What this tests
CISRO competency component 2.2 — Integrate into practice the rules governing the activities of life insurance agents — which is weighted at 40% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 2
- A prospective client wants to confirm that an agent is properly licensed before meeting him. She should:
- A dual-licensed agent's mutual fund business is reviewed following a client complaint. The review will be conducted by:
- Assuris coverage applies to:
- OLHI's services are available to:
- Complaints about an agent's conduct (as opposed to an insurer's claim decision) should be directed to:
- The best summary of an agent's ethical obligations is to:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.