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Financial Professional and Associated Person Requirements In todays financial landscape, its crucial for financial professionals to uphold the highest standards of integrity and transparency. This lesson explores key responsibilities for financial professionals and associated persons to be equipped to act in the best interest of their clients, including topics like client relationships, licensing requirements, communication standards, and conflict of interest management. Numbered divider 1 Regulation Best Interest Reg BI Reg BI requires financial professionals to prioritize their clients interests over their own when making recommendations, even with prospective clients. To comply with Reg BI, financial professionals and HTK must Disclose Conflicts of Interest Financial professionals must disclose any conflicts of interest to clients, including those not covered in required documents like the Form CRS or Best Interest Disclosure. Provide Disclosure Documents Deliver HTK disclosure documents to clients at or before the time of any recommendation. Have a Reasonable Basis for Recommendations Assure recommendations are based on a thorough understanding of the clients investment profile and objectives. Maintain a Conflict of Interest Inventory HTK must keep an updated list of conflicts of interest and assure policies align with Reg BI requirements. Numbered divider 2 Rollovers A rollover involves transferring funds from one eligible retirement plan to another. When assisting clients with rollovers, financial professionals must clearly explain the pros and cons. HTK requires using forms that compare account types, services, and fees—with tools like, Decision Optimizer to facilitate comparisons. Numbered divider 3 Licensing and Registration Financial professionals affiliated with HTK can offer brokerage services, advisory services, or both—provided they have the appropriate licenses and registrations Brokerage Services Require a Series 6 or 7 registration with FINRA Advisory Services Require a Series 65 or 66 registration Form U4 Maintenance Financial professionals must keep their Form U4 updated with employment history, addresses, outside business activities, and relevant disclosures. Changes must be promptly reported to Contracts, Licensing, and Registration CLR. Employees registered with FINRA who do not offer direct services to clients, but perform oversight or operational activities, must adhere to the same reporting requirements and conduct standards. Numbered divider 4 Content Standards FINRA Rule 2210 All public communications must be fair, balanced, and made in good faith to help clients make informed investment decisions. HTK Supervision reviews materials to assure compliance. Electronic Communication With the rise of technology, financial professionals must navigate compliant electronic communication methods like social media and text messaging. These tools can be useful for financial professionals to network, market, and create prospecting opportunities, however they also introduce risk to disclosing personal information. Protecting personal identifiable information PII is critical to protect financial professionals, their clients, their colleagues, and the Companys reputation. Corporate employees may use mobile Zoom Chat when signed in with corporate SSO credentials for secure, onthego messaging. Unapproved messaging systems for securitiesrelated business are prohibited, as these types of communications must be archived and reviewed. Additional information on cybersecurity and electronic communication can be found here httpsconnect.htk.comtoolstechnologyfilestoragesharingsecureemailtextingopens in a new tab. Numbered divider 5 Outside Business Activities OBAs OBAs, or roles outside of HTK, may pose conflicts of interest and require reporting and approval. Common OBAs include fixed insurance sales, legal or accounting practices, and seasonal or parttime jobs. Financial professionals must disclose any relationships where they control another organizations or persons finances, such as acting as a power of attorney or an estateaccount executor. Supervisors evaluate OBAs to mitigate andor control conflicts of interest. If the activities cannot be reasonably supervised or are too restrictive, they may be disapproved. Numbered divider 6 Transactions in Personal Securities Accounts Personal trading may create conflicts of interest. HTK monitors all transactions in financial professionals personal brokerage and advisory accounts, including those of spouses or children. HTK must approve these accounts at the time of opening and financial professionals must link them with iTrade. A list of financial institutions participating in iTrade is available on HTK Connect. Numbered divider 7 Gifts, Gratuities, and Entertainment Gifts and entertainment can create conflicts of interest. HTK has procedures to guide financial professionals and advisers on giving and receiving gifts and reporting them. Financial professionals must familiarize themselves with applicable limits before gifting clients. Supervision System HTK has established policies and written supervisory procedures WSPs to guide its financial professionals and employees on business requirements and to clearly communicate expected behaviors. These policies and WSPs are published and accessible on HTK Connect at httpsconnect.htk.compracticemanagementsupervisioncomplianceopens in a new tab. Financial professionals must adhere to these policies and attest to their understanding and compliance on the Annual Compliance Questionnaire ACQ. As regulations change, HTK updates its policies and procedures to stay compliant and communicates the new requirements to employees and financial professionals. Supervision Activities The HTK Supervision system is designed to meet compliance standards through WSPs and licensed supervisors registered principals. These supervisors oversee and enforce WSPs to assure that procedures are adequately designed and implemented. For example, HTK supervisors carefully review new purchases by analyzing client information and patterns of financial professional activity. If needed, they may request additional details from financial professionals to understand why a product was recommended or to follow up on observed patterns or trends. Financial professionals are expected to respond promptly, provide the necessary documentation, and work with supervisors to maintain compliance with HTKs policies, procedures, relevant rules, and regulatory requirements.