A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 1

According to the CFP Board’s Standards of Professional Conduct, which of the following is not a Fiduciary Duty owed to clients by a CFP® professional?

A. Duty of Care
B. Duty of Loyalty
C. Duty to Follow Client Instructions
D. Duty of Confidentiality

Answer 1

D. Duty of Confidentiality

Sudy Aid

The CFP Board’s Standards of Professional Conduct requires a CFP® professional to provide a Duty of Care, Duty of Loyalty, and a Duty to Follow Client Instructions.

Although the Duty of Confidentiality is required of a CFP® professional, it is not listed as a Fiduciary Duty, but is part of the Duty of Confidentiality and Privacy.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 2

According to the CFP Board’s Standards of Professional Conduct, which of the following is an example of a material conflict of interest that a CFP® professional should disclose to a client?

A. Owning shares of a mutual fund that the client is considering investing in.
B. Belonging to a different political party than the client.
C. Disliking the client’s spouse.
D. Living in a different state than the client.

Answer 2

A. Owning shares of a mutual fund that the client is considering investing in.

The CFP Board’s Standards of Professional Conduct require CFP® professionals to disclose any potential conflicts of interest to their clients, including owning shares of a security that the client is considering investing in.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 3

According to the CFP Board’s Standards of Professional Conduct, which of the following is a duty owed to clients for a CFP® professional who provides financial planning services?

A. The professional must have a fiduciary relationship with the client.
B. The professional must guarantee that the client will achieve their financial goals.
C. The professional must only provide advice on investments.
D. The professional must charge the same fee for all clients.

Answer 3

A. The professional must have a fiduciary relationship with the client.

Sudy Aid

The CFP Board’s Standards of Professional Conduct require CFP® professionals who provide financial planning services to act as fiduciaries, meaning they must act in the best interests of their clients.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 4

According to the CFP Board’s Standards of Professional Conduct, what is the minimum requirement for disclosing conflicts of interest to a client?

A. The disclosure must be made orally.
B. The disclosure must be in writing.
C. The disclosure must be made in person.
D. The disclosure must be in a form that the client understands.

Answer 4

D. The disclosure must be in a form that the client understands.

Study Aid/Resource:

The CFP Board’s Standards of Professional Conduct require CFP® professionals to disclose any potential conflicts of interest to their clients in a form that the client understands. 5.a.iii. “Evidence of oral disclosure of a conflict will be given such weight as CFP Board in its judgment deems appropriate. Written consent to a conflict is not required.”

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 5

According to the CFP Board’s Standards of Professional Conduct, which of the following is NOT listed as a demonstration of ethical behavior for a CFP® professionals?

A. Integrity
B. Diligence
C. Competence
D. Extravagance

Answer 5

D. Extravagance

The CFP Board’s Standards of Professional Conduct require CFP® professionals to adhere to code of ethical behavior, including integrity, diligence, and competence. Extravagance is not a principle of ethical behavior.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 6

According to the CFP Board’s Standards of Professional Conduct, what is the maximum amount of compensation that a CFP® professional may receive for recommending a particular product or service to a client?

A. There is no limit on compensation.
B. The compensation must be reasonable and not excessive.
C. The compensation must be less than 1% of the total investment.
D. The compensation must be disclosed to the client, but there is no limit.

Answer 6

B. The compensation must be reasonable and not excessive.

The CFP Board’s Standards of Professional Conduct require CFP® professionals to disclose any compensation they receive for recommending a particular product or service to a client, and the compensation must be reasonable and not excessive.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 7

According to the CFP Board’s Standards of Professional Conduct, what is the minimum requirement for maintaining client confidentiality?

A. Confidentiality must be maintained at all times, unless the client gives explicit permission to disclose information.
B. Confidentiality must be maintained unless required by law to disclose information.
C. Confidentiality must be maintained unless the information is already publicly available.
D. Confidentiality is not required.

Answer 7

B. Confidentiality must be maintained unless required by law to disclose information.

The CFP Board’s Standards of Professional Conduct require CFP® professionals to maintain client confidentiality, unless required by law to disclose information.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 8

According to the CFP Board’s Standards of Professional Conduct, what is the minimum requirement for providing clear and accurate communication to clients?

A. Communication must be provided in writing.
B. Communication must be provided in person.
C. Communication must be provided in a manner that the client can understand.
D. Communication is not required.

Answer 8

C. Communication must be provided in a manner that the client can understand.

The CFP Board’s Standards of Professional Conduct require CFP® professionals to provide clear and accurate communication to clients, in a manner that the client can understand.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 9

Lisa, a CFP® professional, has been working with a client for several months to develop a comprehensive financial plan. During a recent meeting, the client reveals that they have a terminal illness and may not live long enough to see the plan through. What should Lisa do?

A. Recommend the client to seek a second opinion.
B. Inform the client that the plan can no longer be executed.
C. Review the plan with the client to ensure that their wishes are reflected in it.
D. Ignore the client’s revelation and continue with the financial planning process.

Answer 9

C. Review the plan with the client to ensure that their wishes are reflected in it.

Lisa should prioritize the client’s immediate needs and revise the plan accordingly. The CFP Board’s Standards of Professional Conduct require CFP professionals to act in the best interests of their clients, and in this case, the client’s health needs have become the priority. Lisa should revise the financial plan to reflect the client’s current situation and help the client make any necessary changes to ensure their affairs are in order before passing.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 10

John, a CFP® professional, has been approached by a wealthy client who is interested in investing a large sum of money in a high-risk, high-return investment opportunity. John knows that the investment is risky and may not be suitable for the client’s financial goals, but he also stands to earn a large commission on the sale. What should John do?

A. Disclose the risks associated with the investment and recommend alternative options that align with the client’s financial goals.
B. Sell the investment to the client, as it could earn John a large commission.
C. Persuade the client to invest in the opportunity, as it could provide a quick return on investment.
D. Consult with other professionals in the industry to get their opinion on the investment opportunity.

Answer 10

A. Disclose the risks associated with the investment and recommend alternative options that align with the client’s financial goals.

John should recommend an investment that is suitable for the client’s financial goals, risk tolerance, and investment horizon, rather than solely considering his commission. The CFP Board’s Standards of Professional Conduct require CFP professionals to put their clients’ interests ahead of their own, which means recommending investments that are suitable and in the client’s best interest. John should disclose any potential conflicts of interest and recommend alternative investments that are better suited to the client’s needs.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 11

Sarah, a CFP® professional, has a client who has expressed interest in investing in a new startup that they believe has the potential to be very profitable. Sarah is aware that investing in startups is high-risk and speculative, and that the client may lose all of their money. What should Sarah do?

A. Advise the client against investing in the startup due to the high risk and speculative nature of startup investments.
B. Encourage the client to invest in the startup, but only a small amount of money.
C. Conduct thorough research on the startup before advising the client on whether or not to invest.
D. Provide the client with a list of other investment opportunities that are less risky than startup investments.

Answer 11

C. Conduct thorough research on the startup before advising the client on whether or not to invest.

As a CFP® professional, Sarah has a fiduciary duty to act in the best interest of her client. Therefore, it is important for her to conduct thorough research on the startup to assess the potential risks and rewards associated with the investment. This will allow her to provide her client with informed advice on whether or not to invest in the startup.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 12

Jordan, a newly certified CFP® professional, is discussing with a colleague the importance of adhering to the standards set by the CFP® Board. They are particularly focusing on the CFP Board’s Standards of Professional Conduct. Jordan’s colleague is unsure about the specific role these standards play in their profession.

Based on the scenario, which of the following best describes the role of the CFP® Board’s Standards of Professional Conduct?

A. They provide guidelines for marketing financial products.
B. They set ethical principles and rules of conduct for CFP® professionals.
C. They offer investment advice to clients.
D. They establish minimum education requirements for financial professionals.

Answer 12

B. They set ethical principles and rules of conduct for CFP® professionals.

The CFP Board’s Standards of Professional Conduct are designed to ensure that CFP® professionals adhere to the highest ethical and professional standards. These standards encompass the duties to clients, the public, and the profession, emphasizing principles like integrity, competence, fairness, and confidentiality. They do not directly provide investment advice, set educational requirements, or offer guidelines for marketing financial products. Instead, these standards focus on ethical conduct and professional responsibility, guiding CFP® professionals in their professional activities and decision-making processes.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 13

Alex, a CFP® professional, is concerned about the ramifications of not adhering to the CFP Board’s Standards of Professional Conduct. During a professional development session, Alex and their peers are discussing potential consequences for such violations. The group is considering various scenarios to better understand the range of possible outcomes.

In the context of this discussion, what are the potential consequences for a CFP® professional who violates the CFP® Board’s Standards of Professional Conduct?

A. Suspension of certification for a determined period.
B. Permanent revocation of certification.
C. Legal action resulting from ethical breaches.
D. All of the above.

Answer 13

D. All of the above.

The CFP Board enforces its Standards of Professional Conduct strictly. Violations can lead to various disciplinary actions, depending on the severity and nature of the breach. These actions can include suspension of certification for a certain period, which temporarily restricts the professional from practicing under the CFP® designation. In more severe cases, the Board may permanently revoke certification, which is a more serious penalty. Additionally, if the violation involves illegal activities or breaches of law, it can also lead to legal action against the professional.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 14

Taylor, a CFP® professional, is reviewing case studies with colleagues to better understand the application of the CFP Board’s Standards of Professional Conduct in various situations. One case study involves a financial planner who had to choose between several financial products for a client. The team is discussing whether certain actions in this scenario could be considered violations of the CFP® Board’s Standards.

In the context of this case study, which of the following actions by the financial planner would be a violation of the CFP® Board’s Standards of Professional Conduct?

A. Recommending a financial product that is suitable for the client but not the best available option.
B. Providing investment advice that aligns with the client’s best interests.
C. Fully disclosing all relevant conflicts of interest to the client.
D. None of the above.

Answer 14

A. Recommending a financial product that is suitable for the client but not the best available option.

The CFP Board’s Standards of Professional Conduct require that CFP® professionals act in the best interest of their clients. This includes not only providing suitable recommendations but also ensuring that these recommendations are the best option available for the client, considering their financial goals and circumstances. While options B and C reflect compliance with the Standards (acting in the client’s best interests and disclosing conflicts of interest), option A represents a potential violation, as merely suitable advice may not always align with the client’s best interest if a better option is available.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 15

Morgan, a CFP® professional, is conducting a training session for junior financial planners. The focus of the session is on understanding and adhering to the CFP Board’s Standards of Professional Conduct. Morgan presents various practices and asks the trainees to identify which ones align with these standards.

Question: Based on the training scenario, which of the following practices is a requirement under the CFP Board’s Standards of Professional Conduct?

A. Guaranteeing investment returns to clients.
B. Providing ongoing monitoring of client investments.
C. Acting with integrity and professionalism in all dealings.
D. Offering tax advice to all clients.

Answer 15

C. Acting with integrity and professionalism in all dealings.

The CFP Board’s Standards of Professional Conduct emphasize the importance of integrity, professionalism, and ethical behavior in all aspects of a CFP® professional’s work. This includes being honest, transparent, and acting in the best interests of clients. While ongoing monitoring of client investments can be part of a CFP® professional’s duties, it is not explicitly a requirement under the standards. Guaranteeing investment returns and providing tax advice are not mandatory aspects of the standards, and guaranteeing returns is generally discouraged in financial planning due to the unpredictable nature of investments. Therefore, the best answer is acting with integrity and professionalism.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 16

Jamie, a CFP® professional, is attending an ethics seminar that focuses on the consequences of unethical behavior in the financial planning industry. A case study is presented where a financial planner engaged in fraudulent activities. The seminar participants are discussing the possible repercussions that the planner could face according to the CFP Board’s standards and regulations.

Based on the case study discussed in the seminar, what is a potential consequence for a CFP® professional who engages in fraudulent behavior?

A. Revocation of their CFP® certification.
B. Suspension of their CFP® certification.
C. Legal action against them.
D. All of the above.

Answer 16

D. All of the above.

Engaging in fraudulent behavior is a serious violation of the CFP Board’s Standards of Professional Conduct. Such misconduct can lead to severe penalties, including the revocation or suspension of the CFP® certification. Revocation would permanently remove the certification, while suspension would temporarily restrict the professional from using the CFP® designation. In addition to these disciplinary actions from the CFP Board, fraudulent activities could also result in legal consequences, as fraud is a criminal offense. Therefore, all the options listed are potential consequences of engaging in fraudulent behavior for a CFP® professional.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 17

Which of the following is a requirement of the CFP Board’s Code of Ethics?

A. Providing investment returns that exceed market benchmarks.
B. Disclosing all potential conflicts of interest to clients.
C. Providing a guarantee of investment returns to clients.
D. Maximizing profits for a financial institution.

Answer 17

B. Disclosing all potential conflicts of interest to clients.

This is a requirement under the CFP Board’s Code of Ethics and Standards of Conduct to ensure transparency and to avoid potential conflicts of interest that could negatively impact clients.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 18

Jason is a CFP® professional who is also a member of a country club where many of his clients are also members. One of his clients recently asked him to help them get a membership at the club. What should Jason do?

A. Help the client get a membership as it is a reasonable request.
B. Disclose to the client that he is a member of the club and that he will not be able to provide any special treatment.
C. Decline the request as it creates a potential conflict of interest.
D. Ask the client to recommend him to other potential clients.

Answer 18

B. Disclose to the client that he is a member of the club and that he will not be able to provide any special treatment.

Jason should disclose the potential conflict of interest to his client to ensure transparency and avoid any perceived favoritism.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 19

Michael is a CFP® professional who has recently discovered that one of his clients has been committing tax fraud. What should Michael do?

A. Ignore the situation as it is not his responsibility.
B. Report the client to the authorities as it is illegal.
C. Advise the client to stop committing tax fraud.
D. Discuss the situation with the client and suggest they consult with a tax attorney.

Answer 19

D. Discuss the situation with the client and suggest they consult with a tax attorney.

Michael should work to understand the situation and advise his client on the appropriate next steps, which may include seeking legal counsel.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 20

Jennifer is a CFP® professional who has been working with a client for several years. The client has recently expressed interest in investing in a company that Jennifer has invested in herself. What should Jennifer do?

A. Recommend the investment to the client as it is a good opportunity.
B. Disclose the potential conflict of interest to the client and seek their consent before investing.
C. Decline to discuss the investment with the client.
D. Sell her own investment to avoid any potential conflict of interest.

Answer 20

B. Disclose the potential conflict of interest to the client and seek their consent before investing.

Jennifer should disclose the potential conflict of interest to her client and seek their consent before investing, to ensure transparency and avoid any perceived favoritism.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 21

Sarah is a CFP® professional who has been working with a client for several years. The client has recently asked Sarah to provide investment advice on a company that Sarah used to work for. What should Sarah do?

A. Provide investment advice to the client as she is knowledgeable about the company.
B. Decline to provide investment advice on the company as it creates a potential conflict of interest.
C. Provide investment advice on the company, but disclose her previous employment to the client.
D. Ask the client to recommend her services to other potential clients.

Answer 21

C. Provide investment advice on the company, but disclose her previous employment to the client.

Sarah should provide investment advice to the client, but disclose her previous employment to the client to ensure transparency and avoid any perceived conflict of interest.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 22

Which of the following is an example of prohibited conduct for financial planners?

A. Providing a client with a disclosure statement.
B. Failing to renew a license on time.
C. Insider trading.
D. Recommending an investment that is not suitable for the client.

Answer 22

C. Insider trading

It is illegal for financial planners to engage in insider trading, which involves trading on information that is not available to the public.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 23

What does the CFP Board’s Code of Ethics require of CFP® professionals?

A. To only act in the interest of the planner.
B. To act in the client’s best interest with honesty, integrity, competence, and diligence.
C. To charge the highest possible fee for their service.
D. To always refer clients to other professionals.

Answer 23

B. To act in the client’s best interest with honesty, integrity, competence, and diligence.

The CFP Board’s Code of Ethics requires that CFP® professionals act in the client’s best interest, demonstrating honesty, integrity, competence, and diligence.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 24

Case Study: The Case of Ms. Clara Meyers

Background:

Ms. Clara Meyers is a Certified Financial Planner CFP® with over 20 years of experience in the industry. She operates a solo practice and has built a strong reputation in her community. Over the years, she has managed to attract a sizeable clientele, many of whom are high-net-worth individuals.

Situation:

In early 2023, Ms. Meyers was approached by a new client, Mr. Samuel Green, who had recently received an inheritance of $2 million. Mr. Green was relatively inexperienced in financial matters and sought guidance on how to best invest and manage his newfound wealth.

After an initial discussion, Ms. Meyers recommended a diversified portfolio. She also suggested investing a portion of the inheritance in a real estate development project which she believed had promising returns. Ms. Meyers failed to disclose, however, that her brother was one of the main developers of the project.

A year later, the real estate project ran into unforeseen complications. The project faced legal challenges and subsequent delays, jeopardizing the investments. As the value of Mr. Green’s investment diminished, he began to research the project and discovered the connection between Ms. Meyers’s brother and the development.

Mr. Green felt betrayed and filed a complaint against Ms. Meyers, accusing her of a conflict of interest.

Question: What was the conflict of interest?

A. Ms. Meyers has limited experience.
B. Ms. Meyers did not disclose her brother’s involvement in the project.
C. Mr. Green received a large inheritance.
D. The real estate project failed.

Answer 24

B. Ms. Meyers did not disclose her brother’s involvement in the project.

While there are various elements in the story, the primary ethical issue is the failure to disclose the conflict of interest.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 25

Case Study: The Case of Ms. Clara Meyers

Background:

Ms. Clara Meyers is a Certified Financial Planner CFP® with over 20 years of experience in the industry. She operates a solo practice and has built a strong reputation in her community. Over the years, she has managed to attract a sizeable clientele, many of whom are high-net-worth individuals.

Situation:

In early 2023, Ms. Meyers was approached by a new client, Mr. Samuel Green, who had recently received an inheritance of $2 million. Mr. Green was relatively inexperienced in financial matters and sought guidance on how to best invest and manage his newfound wealth.

After an initial discussion, Ms. Meyers recommended a diversified portfolio. She also suggested investing a portion of the inheritance in a real estate development project which she believed had promising returns. Ms. Meyers failed to disclose, however, that her brother was one of the main developers of the project.

A year later, the real estate project ran into unforeseen complications. The project faced legal challenges and subsequent delays, jeopardizing the investments. As the value of Mr. Green’s investment diminished, he began to research the project and discovered the connection between Ms. Meyers’s brother and the development.

Mr. Green felt betrayed and filed a complaint against Ms. Meyers, accusing her of a conflict of interest.

Question: Which CFP Standard of Professional Conduct did Ms. Meyers most likely violate?

A. Duty of Care
B. Duty of Loyalty
C. Duty of Disclosure
D. Duty of Confidentiality

Answer 25

C. Duty of Disclosure

According to the CFP Board’s Code of Ethics and Standards of Conduct, Ms. Meyers failed to disclose her personal relationship to the real estate development project, which represents a conflict of interest.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 26

According to the CFP Board’s Code of Ethics and Standards of Conduct, under which circumstance is a CFP professional obligated to act in a fiduciary capacity?

A. While dispensing financial counsel.
B. During the execution of all-encompassing financial strategizing.
C. When guiding on tax-related matters.
D. When offering investment recommendations.

Answer 26

A. While dispensing financial counsel.

The CFP Board’s Code of Ethics and Standards of Conduct mandates that a CFP professional must act as a fiduciary whenever they provide financial advice to a client. This means they are obliged to act in the best interest of their client when delivering any form of financial counsel.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 27

Rachel Stevens, a CFP® professional, had to unexpectedly travel for a family emergency. Prior to her departure, she received seven checks from clients who wished to have these funds placed in their individual retirement accounts. While on her trip, Rachel realized she couldn’t deposit these funds into the retirement accounts directly. Instead, she deposited all seven checks into her firm’s operating account, intending to later transfer the funds to each client’s retirement account. Did Rachel violate any standard within the CFP Board’s Code of Ethics and Standards of Conduct?

A. No, because she intended to transfer the funds to each client’s retirement account later.
B. No, because she was out of town and had a valid reason for not depositing the checks directly.
C. Yes, because she used her firm’s account as a temporary holding place for client funds.
D. Yes, because she received the checks prior to her departure and should have deposited them immediately.

Answer 27

C. Yes, because she used her firm’s account as a temporary holding place for client funds.

Rachel’s decision to deposit client funds into her firm’s operating account, even with the intention of later transferring them to the clients’ retirement accounts, is a violation. It goes against the standards of safeguarding and properly handling client funds, as outlined in the CFP Board’s Code of Ethics and Standards of Conduct. The CFP professional has a fiduciary duty to act in the best interest of the client, and commingling client funds with firm funds compromises this duty.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 28

James, a CFP® professional, is discussing his compensation method with a potential client, Alice. Under which of the following scenarios can James accurately describe his or his firm’s compensation method as “fee-only” according to the CFP Board’s Code of Ethics and Standards of Conduct?

A. James receives both fees from his clients and commissions from financial product providers.
B. The firm James works for receives referral fees from another financial institution, but James personally only receives fees from clients.
C. James exclusively receives fees directly from his clients and does not receive any other type of compensation related to the financial advice he provides.
D. James occasionally receives a gift from financial product providers, but it is not related to the number of products he sells.

Answer 28

C. James exclusively receives fees directly from his clients and does not receive any other type of compensation related to the financial advice he provides.

According to the CFP Board’s Code of Ethics and Standards of Conduct, a CFP® professional or their firm can only represent their compensation method as “fee-only” if they exclusively receive fees from clients for the financial advice they provide and no other forms of compensation, such as commissions or referral fees.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 29

Jacob Anderson, a CFP® professional, works at XYZ Financial, a Registered Investment Advisor. His clients, Paul and Sally Whitman, are aged 80 and 78 respectively. The Whitmans have appointed their neighbor, Mark Newman, as Power of Attorney to manage their finances. The Power of Attorney for both Mr. and Mrs. Whitman is documented with XYZ Financial. According to the CFP Board’s Code of Ethics and Standards of Conduct, which of the following best describes Mr. Anderson’s obligations concerning confidentiality and privacy?

A. Mr. Anderson can discuss the Whitmans’ investments and his investment recommendations with Mr. Newman.
B. Mr. Anderson should not speak with Mr. Newman unless either Mr. or Mrs. Whitman is present in the conversation.
C. Before talking about the Whitmans’ investments with Mr. Newman, Mr. Anderson has to inform the CFP board about the Power of Attorneys in his records.
D. Mr. Anderson is not permitted to talk about any investment recommendations or decisions with Mr. Newman.

Answer 29

A. Mr. Anderson can discuss the Whitmans’ investments and his investment recommendations with Mr. Newman.

The presence of the Power of Attorney documentation at XYZ Financial means that Mr. Newman has been legally given the authority to make financial decisions on behalf of the Whitmans. As such, Mr. Anderson can share investment details and recommendations with him, while still upholding the confidentiality and privacy standards of the CFP Board’s Code of Ethics.

A.1 CFP Board’s Code of Ethics and Standards of Conduct

Question 30

Case Study: Strategic Investment Planning for George’s Assets

Background:
George, an 82-year-old retiree, has a considerable portfolio that he does not need for daily expenses. His adult children, James and Linda, both in their late 50s, are exploring investment options for managing George’s assets. As the sole beneficiaries of George’s estate, they are focused on a growth-oriented strategy, reflecting a long-term investment horizon. They seek out your professional advice to ensure that their approach aligns with both their goals and George’s financial well-being.

Objective:
James and Linda’s primary objective is to maximize the long-term growth of George’s assets without compromising his financial security. They are considering different strategies to enhance the value of the estate they will eventually inherit.

What is your best path forward?

A. Secure a Durable Power of Attorney
B. Develop a Tailored Investment Plan:
C.Consult directly with George to establish his investment goals and risk tolerance
D.Consideration of Long-Term Care Insurance:

Answer 30

C. Consult directly with George to establish his investment goals and risk tolerance

While both options A and C involve appropriate steps to ensure the interests of the principal (George) are protected, option C is the better choice. It directly addresses the need for the CFP® professional to engage with George himself to understand his personal financial goals, risk tolerance, and investment needs, ensuring that any plan developed is truly aligned with his interests.

A.1 CFP Board’s Code of Ethics and Standards of Conduct