Series 65: 10.1.1. Disclosure

10.1.1. Disclosure

The cornerstone of good and ethical communication with clients is the concept of disclosure, or revealing what a client would need to know to make an educated decision about your services or about a suggested investment. That doesn’t mean you need to reveal every single fact about your life and career or every tidbit of information ever generated about a potential investment, just those considered material facts. You are required to share anything that a reasonable person would want or would need to know as a part of the decision-making process.

As part of the disclosure process, it is crucial that you don’t misrepresent or omit any material facts. Misrepresentation occurs when a professional doesn’t accurately describe or communicate an aspect of her qualifications, of her services, or of an investment. Omitting material facts occurs when a professional just flat out skips over even mentioning something that a reasonable person would want to know.

Note: If the exam asks whether it is okay to omit facts when dealing with a client/investor, the answer is that it is okay to omit immaterial facts, but not okay to omit material facts. Material facts are those that are relevant to making an informed