4/25/23 Flashcards
What is financial planning?
- A collaborative process
- Helps maximize a client’s potential for meeting life goals through financial advice
- Integrates relevant elements of the client’s personal and financial circumstances
What is financial advice?
Communication that would reasonably be viewed as a recommendation on the particular course of action with respect to:
1. Development or implementation of a financial plan
2. Value of investing in, purchasing, holding, or selling financial assets
3. Investment policies or strategies, portfolio composition, the management of financial assets
4. Selection and retention of other persons to provide professional services to the client
What is not financial advice?
- Responses to directed orders
- Marketing materials
- General financial education
- General financial communications
What are the examples of relevant elements of financial planning?
- Developing client goals
- Managing assets and liabilities
- Managing cash flow
- Identifying and managing risks
Definition of integration factors
Variables that weigh in determining whether financial advice requires financial planning
What are the integration factors?
- The number of relevant elements of the client’s circumstances that the Financial Advice may affect
- The portion and amount of Financial assets affected
- The length of time the client’s circumstances may be affected
- The effect on the client’s overall exposure to risk if the client implements the Financial Advice
- The barriers to modifying the actions taken to implement the Financial Advice
What are the components of the Standards of Conduct?
- Duties owed to clients
- Duties owed to firms and subordinates
- Duties owed to the CFP board
- Prohibition on circumvention
- Practice standards for the financial planning process
- Financial planning and application of the practice standards for the financial planning process
What are the duties owed to clients?
A.2 Integrity
A.3 Competence
A.4 Diligence
A.5 Disclose and manage conflicts of interest
A.7 Professionalism
A.8 Comply with the law
A.9 Confidentiality and privacy
A.10 Provide information to a client
A.11 Duties when communicating with a client
A.12 Duties when representing comp method
A.13 Duties when recommending, engaging, and working with additional persons
A.14 Duties when selecting, using, and recommending tech
A.15 Refrain from borrowing or lending money and commingling financial assets
What are the 7 steps in the financial planning process?
- Understanding the client’s personal and financial circumstances
- Identifying and selecting goals
- Analyzing client’s current course of action and potential alternatives
- Develop financial plan recommendations
- Presenting the financial planning recommendations
- Implementing the financial recommendations
- Monitor progress and update
What are the duties owed to firms and subordinates?
- Use reasonable care when supervising
- Comply with lawful objectives of CFP professional’s firm
- Provide notice of public discipline
What are the duties owed to the CFP board?
- Avoid any adverse conduct
- Report incidents involving adverse conduct to the CFP board within 30 days
- Provide a narrative statement to the CFP board on reportable matters
- Cooperation with the CFP board throughout investigations and disciplinary proceedings
- Compliance with the terms and conditions of certifications and license
What are the fiduciary duties?
- Duty of loyalty
- Duty of care
- Duty to disclose
- Duty to diagnose
- Duty to consult
- Duty to keep current
What will always bar an individual from becoming certified?
Unacceptable conduct
1. Felony conviction of theft, embezzlement, or other financially based crimes
2. Felony conviction of tax fraud or other tax-related crimes
3. Revocation of a financial professional license, unless the revocation is administrative in nature
4. Felony conviction of any degree of murder or rape
5. Felony conviction of any violent crime within the last 5 years
What is a presumptive bar?
Prevents certification, unless the Disciplinary and Ethics Commission (DEC) reconsiders and makes a different determination after a review
1. Two or more personal or business bankruptcies
2. Revocation or suspension of a nonfinancial professional license, unless administrative in nature
3. Felony conviction of a violent crime other than murder or rape that occured more than 5 years ago
What are the options for the DEC to do after reviewing a petition?
- Grant it
- Deny it
- Deny, but allow individual to re-apply
