What is the most common thing between the Canadian Investment Regulatory Exam and Retail Securities Exam? The way they are tested!
Exams are by their nature designed to test your overall understanding of the material, but they don’t always prepare you for the challenges of actually working with clients. Having said that, if the preparation for these exams provides you with answers on how to operate when you actually have to deal with clients, that is great! All too painful are the memories of the Canadian Securities Course days, when you memorize pages and pages of ostensibly important material only to never again hear the terms or concepts in the real work environment.
At Scentia Learning, we design the learning material to serve both purposes. We provide what you need to pass the test in the least painful way, AND we include material that we think is going to be relevant when you actually start dealing with clients.
When it comes to exams, it’s not always as easily as just memorizing the material. Good exams test your understanding of concepts, and even when you understand the concepts, they seem to get you with a few (or more) weird questions.
We identified the following tactics to help you succeed on the CIRO exams.
Reading the Question Carefully
The difference between the right and wrong answer on the exams is often a matter of how well you read the question. One word can play a role in what the question is really asking.
Example: Which organization in Canada reviews criminal cases of insider trading?
- Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
- Integrated Market Enforcement Teams (IMET)
- Canadian Investment Regulatory Organization (CIRO)
- Canadian Securities Administrators (CSA)
Although individuals in the industry know that CIRO, IMETs, and CSA (indirectly through the Securities Commissions) may review insider trading, the key here is the word “criminal”, which leaves us with one right answer: Integrated Market Enforcement Teams (IMET).
Eliminating Wrong Answers
Certain questions are written in a way that allows you to select the right answer even without knowing it for certain. Ask yourself how each one of the answers fits into the question.
Example: When a firm comes across a material conflict of interests, what must it do?
- Inform the client of the conflict
- Ignore the conflict after determining no client is affected at this time
- Control or avoid the conflict
- Provide training to Investment Advisors on how to handle the conflict
Similar to the previous question, it is important to note that the conflict identified is material, which means that the conflict exists. After the conflict is disclosed to the client, it does not actually eliminate the concerns. Providing training to an advisor may help handle material conflicts in the future, but it does not address the existing conflict. Ignoring a conflict is not an option, since it is material, and by default the conflict exists between a client and the firm or Investment Advisor. This leaves us with the only option to Control or Avoid the conflict.
Understanding the Principles
When you know the key principles of regulatory rules, you are able to answer multiple questions without knowing everything about it.
Example: What is the purpose of the Fund Fact document?
- To replace the prospectus
- To summarize the purchase details after acquiring a mutual fund
- To disclose relevant information such as costs and risks before a mutual fund is purchased
- To describe recent events about the fund
One of the key principles in the industry is that all costs must be disclosed to a client before a product is purchased. Even if you don’t remember much about a Fund Fact document, you are still able to derive the right answer.
Relying on Bulletproof Answers
Look for answers that would be correct in almost any situation—these are your ‘bulletproof answers.
Example: A client wants an investment advisor to buy a high-risk security that clearly does not match their investment profile. What should the advisor do?
- Proceed with the order since it is the client’s money and choice.
- Reimburse the client if the security experiences losses
- Act in the best interest of the client by providing alternative options
- Allow the client to go ahead but document the trade as “unsolicited” and take no further action.
From the four answers above only one answer would stand true on its own in any situation. Answer C. Even if the answer is taken out of the question and applied to other similar situations, it would still hold true.
At Scentia Learning, our CIRE training program doesn’t just give you the right answers—it explains why they’re right. That way, every practice test becomes a learning tool, not just a box-ticking exercise. We focus on topics that give you overall understanding of how to approach various scenarios, ensuring your understanding of relevant subjects goes beyond just memorizing sentences.