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Ethical Behavior for Financial Professionals #293426

Course Overview

Credit

Amount

IAR/FINRA

Course Author: Paul J. Winn CLU ChFC Field of Study (IAR): Ethics and Professional Responsibility

Course Description

Publication/Revision Date: This course was updated on 3/26/2026.

Ethical Behavior for Financial Professionals examines the nature and scope of ethics, as the foundation of integrity and honesty, and its relationship to compliance. It reviews the requirements of Regulation Best Interest and the Investment Adviser Marketing Rule.

Table of Contents

Chapter One - Introduction to Ethics1

Important Lesson Points	1
Introduction	1
The Foundation of Ethics	2
Golden Rule	2
The Nature of Compliance	3
Professionalism & the Industry's Public Image	4
Cornerstone Principles of Professional Ethics	5
Honesty	6
Advertising and Sales Literature	6
Communications	7
Recommendations	8
Seeking Other Professional Resources	9
Fairness	9
Disclosure	9
Professional Fees	10
Loyalty	10
Confidentiality	11
Professional Competence	11
Skill Level	11
Holding Out	12
Diligence	12
Chapter 1 Review	13

Chapter Two - The Legal Framework of Compliance & Ethics14

Important Lesson Points	14
Federal Government Role	14
Reserved Powers under McCarran-Ferguson	15
Federal Taxation	15
Health Insurance and Pension Legislation	15
Securities Regulation	15
State Government Role	16
Common Law & the Concept of Agency	17
Express Authority	17
Implied Authority	17
Apparent Authority	18
Ratification	18
Legal Concepts That Impact Liability	19
Course of Conduct and Custom Doctrine	19
Waiver	19
Estoppel	20
Election	20
Judicial Extension of Liability	21
Caveat Emptor	21
Caveat Vendor	21
Chapter 2 Review	22

Chapter Three - Guidelines for Reviewing Sales Tools & Process23

Important Lesson Points	23
Introduction	23
Financial Practitioner Sales Tools	23
Stationery and Business Cards	24
Advertising and Direct Mail	25
Personal Brochures	26
Magazine Articles	27
Financial Practitioner Sales Process	28
The Approach	28
Desire for Appearance of Competence and Credibility	28
Balanced and Complete Information Should Be Provided	29
Holding Out	29
Increased Liability	29
Trade Name Usage	30
Product or Strategy Discussion in the Approach Step	30
Opening & Fact-Finding Interviews	31
Full Disclosure Required	31
Graphics, Testimonials, and Endorsements	31
Information Gathering in Fact-Finding Interviews	32
Need for Thoroughness	32
Avoid Inadvertently Misleading the Prospect	32
Presentations & Illustrations	32
Suitability the Critical Element	33
Presentation Should Enhance Prospect Understanding	33
Product Functions	33
Financial Product Comparisons	33
Comparisons Should Be Balanced and Complete	34
Risk Disclosure	34
Supporting Materials	35
Assumptions May Not Be Realized	35
Dividends May Be Higher, Lower or Nonexistent	35
Chapter 3 Review	36

Chapter Four – Regulation Best Interest Requirements37

Important Lesson Points	37
Introduction	37
Regulation Best Interest	37
The Disclosure Obligation	37
The Care Obligation	38
The Conflict of Interest Obligation	38
The Compliance Obligation	38
Effect of Regulation Best Interest	39
Impact of the Disclosure Obligation	39
Impact of the Care Obligation	40
Suitability Defined	40
Suitability Requirements	41
Buyer Competence	41
Determining Reasonable Grounds Requires Obtaining Information	42
Age	43
Annual Income	43
Financial Situation	43
Financial Experience	43
Financial Objectives & Intended Annuity Use	44
Financial Time Horizon	44
Existing Assets	45
Adequate Life Insurance	45
Asset Composition	45
Liquidity Needs & Liquid Net Worth	45
Risk Tolerance	46
Conservative Risk Tolerance	47
Moderate Risk Tolerance	47
Aggressive Risk Tolerance	48
Tax Status	48
Chapter 4 Review	49

Chapter Five – The Investment Adviser Marketing Rule50

Important Lesson Points	50
Introduction	50
Definition of Advertisement	50
Direct Communications	51
Indirect Advertisements	51
Adoption or Entanglement of Third-Party Marketing Materials	51
Guidance on Social Media	52
One-on-One Communications	52
Offering Investment Advisory Services	53
Brand Content	53
General Educational Information and Market Commentary	53
General Prohibitions as to Advertisements	54
Compensated Testimonials and Endorsements, Including Solicitations	55
Definitions of Testimonial and Endorsement	55
Cash and Non-Cash Compensation	55
Inclusion of One-on-one and Extemporaneous, Live, Oral Communications	56
Investors in Private Funds	56
General Prohibitions	56
Untrue Statements and Omissions	57
Unsubstantiated Material Statements of Fact	57
Untrue or Misleading Implications or Inferences	58
Fair and Balanced Treatment of Material Risks or Material Limitations	58
Anti-Cherry Picking Provisions	58
Presentation of Past Specific Investment Advice	59
Presentation of Performance Results	60
Otherwise Materially Misleading	60
Conditions Applicable to Testimonials and Endorsements, Including Solicitations	60
Required Disclosures	61
Clearly and Prominently	61
Status as a Client or Non-Client	62
Fact of Compensation	62
Statement of Material Conflicts of Interest	62
Material Terms of Compensation Arrangement	62
Material Conflicts of Interest	63
Reasonable Belief	63
Timing of Disclosures	63
Adviser Oversight and Compliance	63
Disqualification for Persons Who Have Engaged in Misconduct	64
Ineligible Person	64
Disqualifying Commission Action	64
Disqualifying Event	64
Application to Existing Events	65
Exemptions	65
Affiliated Personnel	65
Registered Broker-Dealers	65
Third Party Ratings	66
Performance Advertising	66
Deduction of Model Fees	66
Conditions for Presentation	66
Prescribed Time Periods	67
Statements about Commission Approval	67
Related Performance	67
Related Portfolio	67
Extracted Performance	67
Hypothetical Performance	67
Types of Hypothetical Performance	68
Model Performance	68
Backtested Performance	68
Targets and Projections	69
Conditions on Presentation of Hypothetical Performance	69
Portability	69
Review and Approval of Advertisements	70
Recordkeeping	70
Chapter 5 Review	71

Chapter Six - Common Ethical and Compliance Problems72

Important Lesson Points	72
Introduction	72
Breach of Fiduciary Duty	73
Insurance Solicitation	73
Requirement for Reasonable Care	73
Disclosure	73
Applications	74
Claim Forms	74
Conflict of Interest	74
Timely Business Transactions	74
Accounting for Premiums	74
Loyalty and Obedience	75
Unethical and Illegal Acts	75
Churning	75
Rebating	76
Failing to Disclose Policyowner Rights	76
Misrepresentation	76
Special Issues in Insurance Replacement	77
Comparisons Required to Be Complete and Accurate	77
Impact of Replacement Legislation	77
Reasonable Client Expectations	78
Misleading Terms	79
Avoid Terms That Obscure	79
Vanishing Premiums	80
Private Pension	80
Disguising Language	80
Special Concerns when Working with an Older or Impaired Client	81
Obtaining Information from an Elderly or Impaired Client	81
Making Recommendations to an Elderly or Impaired Client	82
Implementing Plans for an Elderly or Impaired Client	83
Identifying Buyer Competence Concerns	83
Chapter 6 Review	84

Glossary86

Answers to Chapter Review Questions89

Chapter 1	89
Chapter 2	89
Chapter 3	90
Chapter 4	90
Chapter 5	91
Chapter 6	91

Appendix92

Course Details

Author: Paul J. Winn CLU ChFC

Paul J. Winn CLU ChFC — Financial Writer, Editor & Trainer. Education: B.A., St. John’s University (1961–1964); Law School, University of Virginia (1964–1965); MBA program Binghamton University (1986–1989); CLU (1985); ChFC (1987). Experience: Thirty years in the life insurance and investment industry (1965–1995). Thirty-one years as a financial writer, editor and trainer (1995–2026). Paul held positions at Mutual Life Insurance Company of New York as product developer and compensation officer; at Security Mutual Life Insurance Company as general agent, marketing vice president, and agency vice president; at Principal Financial Group as agency manager; and as president of Maryland Financial Corporation, managing a financial adviser corporation providing tax, investment and financial planning. As a writer and editor, Paul is a published book author whose books include Tax Planning from the Heart, Business Succession Planning, and Dominating Obamacare. He served as writer and editor of a major mutual life insurance company’s agent training university, created more than 200 insurance, securities and tax training courses in online, print and scripted classroom formats, and is the founder and CEO of Winn Publications LLC, a tax and insurance continuing education course licensor.

Publication/Revision Date: 3/26/2026

Course Exam Questions (online): 40 (multiple-choice)

Program Delivery Method: Self-Study

Available Formats of Course Text: Downloadable PDF, Printed/Mailed

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
IAR	Basic	None	None

Sponsor ID Numbers

NASAA Sponsor I.D.: S17460 — Course I.D.: C82023

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Understand the nature of ethics and identify those parties to whom the practitioner owes an ethical duty;
Recognize the requirements of Regulation Best Interest and the Investment Adviser Marketing Rule;
Identify and change any sales tools that may mislead customers;
Replace the use of misleading terms with those offering clarity and customer understanding;
Describe the need for increased professionalism and its consequences;
Discuss the sources of duty practitioners owe insurers;
Understand the common ethical issues that arise between financial services practitioners and customers; and
Differentiate his or her practice on the basis of its high ethical level.

Online Book, Online Exam

$45.00

Hardcopy Book, Online Exam

$57.00