Accredited Wealth Management Advisor (AWMA) Exam 2 Practice Test 2026 - Free AWMA Practice Questions and Study Guide

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Which statement about the comparison between the suitability standard and the fiduciary standard is correct?

Both approaches require the duty of loyalty when working with clients.

The suitability standard and the fiduciary standard are essentially the same thing.

Both approaches are primarily solution driven rather than product driven.

Verbal disclosure may be adequate under the suitability standard but not the fiduciary standard.

The main idea is the difference in duties and disclosure expectations between the suitability standard and the fiduciary standard. Under the suitability standard, a recommendation just has to be suitable for the client’s needs and circumstances, and the disclosure can be less formal—verbal explanations about risks, fees, and conflicts may be enough if the product is deemed suitable. In contrast, the fiduciary standard requires acting in the client’s best interest with loyalty and care, and it demands full, clear disclosure of all material conflicts, typically in writing. Because of that higher duty, verbal disclosures alone do not meet fiduciary obligations.

So the statement that verbal disclosure may be adequate under the suitability standard but not under the fiduciary standard is the best choice. The other options are inconsistent with how the two standards differ in loyalty and disclosure requirements, and in how they guide the advisor’s duties.