101-8 Professional Conduct & Fiduciary Responsibility

Question 1

CFP Board’s Code of Ethics and Standards of Conduct

Answer 1

Define the expected level of professional conduct and practice for CFP certificants

Question 2

CFP Board’s Disciplinary and Ethics Commission

Answer 2

Responsible for investigating, reviewing, and considering recommendations and issuing final decisions in these instances

Question 3

6 principles of the CFP Board’s Code of Ethics

Answer 3

1. Act with honesty, integrity, competence, and diligence
2. Act in the client’s best interest
3. Exercise due care
4. Avoid or disclose and manage conflicts of interest
5. Maintain the confidentiality and protect the privacy of client information
6. Act in a manner that reflects positively on the financial planning profession and CFP certification

Question 4

Duties owed to client

Answer 4

• Fiduciary duty
• Integrity
• Competence
• Diligence
• Disclose and Manage Conflicts of Interest
• Sound and Objective Professional Judgment
• Professionalism
• Comply With the Law
• Confidentiality and Privacy
• Provide Information to a Client
• Duties when communicating to a client
• Duties when representing compensation method
• Duties when recommending, engaging, and working with additional persons
• Duties when selecting, using, and recommending technology
• Refrain from borrowing or lending money and commingling financial assets

Question 5

Financial Planning

Answer 5

A collaborative process that helps maximize a Client’s potential for meeting life goals through financial advice that integrates relevant elements of the Client’s personal and financial circumstances

Question 6

Financial Advice

Answer 6

A. A communication that, based on its content, context, and presentation, would reasonably be viewed as a recommendation that the Client take or refrain from taking a particular course or action

B. The exercise of discretionary authority over the Financial Assets of a client

Question 7

CFP Board Practice Standards for the Financial Planning Process

Answer 7

1. Understanding the Client’s personal and financial circumstances
2. Identifying and selecting goals
3. Analyzing the client’s current course of action and potential alternative course(s) of action
4. Developing the financial planning recommendation(s)
5. Presenting the financial planning recommendation(s)
6. Implementing the financial planning recommendation(s)
7. Monitoring progress and updating

Question 8

Disciplinary Rules and Procedures

Answer 8

1. Request for investigation
2. Investigation
3. Probable cause determination
4. Hearing panel
5. Disciplinary and Ethics Commission
6. Appeals Committee

Question 9

Forms of Discipline

Answer 9

• private written censure
• public letter of admonition
• suspension of the right to use the CFP marks for a specified period of time, not to exceed 5 years
• Permanent revocation of the right to use the CFP marks

Question 10

3 Duties to uphold fiduciary standard

Answer 10

1. Duty of loyalty
2. Duty of care
3. Duty to follow client instructions