511 - Module 5

Question 1

Code of Ethics

Answer 1

A CFP professional must:
Act with honesty, integrity, competence, and diligence.
Act in the client’s best interests.
Exercise due care.
Avoid or disclose and manage conflicts of interest.
Maintain the confidentiality and protect the privacy of client information.
Act in a manner that reflects positively on the financial planning profession and CFP certification.

Question 2

Duties that a CFP professional owes to clients at all times.

Answer 2

Integrity
Competence
Diligence
Sound and objective professional judgment
Professionalism
Comply with the law
Confidentiality and privacy
Duties when communicating with a client
Duties when representing compensation method
Duties when selecting, using and recommending technology
Refrain from borrowing or lending money and commingling financial assets.

Question 3

Duties a CFP professional owes to clients when offering Financial Advice

Answer 3

The duties that apply at all times
Fiduciary duty
Disclose and manage conflicts of interest
Provide information to a client
Duties when recommending, engaging, and working with additional persons

Question 4

Duties a CFP professional owes to clients when offering Financial Planning

Answer 4

The duties that apply when offering Financial Advice
The Practice Standards for the financial planning process
Information to a client in writing

Question 5

Duties a CFP professional owes to firms and subordinates

Answer 5

Use reasonable care when supervising
Comply with lawful objectives of the firm
Provide notice of public discipline

Question 6

Duties a CFP professional owes to the CFP Board

Answer 6

Refrain from adverse conduct
Reporting
Provide narrative statement
Cooperation
Compliance with Terms and Conditions of Certification and Trademark License

Question 7

Fiduciary Duty

Answer 7

Cornerstone of the Code and Standards

Fiduciary Duty = Duty of Loyalty + Duty of Care + Duty to Follow Client Instructions

Question 8

Duty of Loyalty

Answer 8

A CFP professional must:
Place the interests of the client above the interests of themselves and their firm
Avoid conflicts of interest, or fully disclose material conflicts of interest to the client, obtain the client’s informed consent, and properly manage the conflict.
Act without regard to the financial or other interests of the CFP professional, their firm, or any other individual or entity other than the client

Question 9

Duty of Care

Answer 9

A CFP professional must act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the client’s goals, risk tolerance, objectives, and financial and personal circumstances.

Question 10

Duty to Follow Client Instructions

Answer 10

A CFP professional must comply with the terms of the client engagement and follow all directions of the client that are reasonable and lawful.

Question 11

Relevant Elements

Answer 11

Developing client goals
Managing assets and liabilities
Managing cash flow
Identifying and managing risks
Identifying and managing the financial effect of health considerations
Pr0viding for educational needs
Achieving financial security
preserving or increasing wealth
Identifying tax considerations
Preparing for retirement
Pursuing philanthropic interests
Addressing estate and legacy matters

Question 12

Integration Factors

Answer 12

The number of relevant elements the advice may affect.
The portion and amount of the client’s financial assets the advice may affect.
The length of time the client’s circumstances may be affected.
The effect on the client’s overall exposure to risk.
The barriers to modifying the actions taken.