Affiliate Broker Tennessee (TN PSI) National Practice Exam `

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Study for the Affiliate Broker Tennessee National Exam. Practice with flashcards and multiple choice questions, with hints and explanations. Prepare well for your licensing exam!

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What is the main concern when a broker commingles client funds with personal funds?

It is a common practice
It violates fiduciary duty
It simplifies transactions
It is legal if disclosed

The correct answer is: It violates fiduciary duty

The main concern when a broker commingles client funds with personal funds is that it violates fiduciary duty. A fiduciary duty requires brokers to act in the best interests of their clients, which includes handling their funds with the utmost care and integrity. Commingling funds undermines this duty, as it can lead to mismanagement, loss of client funds, or even allegations of fraud. Clients trust brokers to keep their money safe and separate from the broker's personal finances, and any violation of this trust can result in serious legal and professional repercussions. Maintaining clear boundaries between personal and client funds ensures transparency and proper accountability, which are essential components of a brokers' fiduciary responsibilities.