A.2 CFP Board’s Procedural Rules

Question 1

How can a CFP® professional report a violation of the CFP Board’s Code of Ethics and Standards of Conduct?

A. By sending an email to the CFP Board’s Ethics Hotline
B. By calling the CFP Board’s Ethics Hotline
C. By submitting a written complaint to the CFP Board’s Professional Standards department
D. All of the above

Answer 1

D. All of the above

A CFP® professional can report a violation of the CFP Board’s Code of Ethics and Standards of Conduct through the Ethics Hotline by email or phone, or by submitting a written complaint to the Professional Standards department.

A.2 CFP Board’s Procedural Rules

Question 2

What is the maximum number of years that a CFP® professional can remain inactive without losing their CFP® certification?

A. 2 years
B. 3 years
C. 5 years
D. 7 years

Answer 2

C. 5 years

A CFP® professional can remain inactive for up to 5 years without losing their CFP® certification. If they exceed this time period, they will need to complete the current education, examination, and experience requirements to regain their certification.

A.2 CFP Board’s Procedural Rules

Question 3

Based on the CFP Board’s Procedureal Rules, Duties Owed to CFP Board, how long does a CFP® professional have to respond to a CFP Board inquiry or complaint?

A. 10 calendar days
B. 14 calendar days
C. 30 calendar days
D. 45 calendar days

Answer 3

C. 30 calendar days

Per the CFP Board’s Procedural Rules, a CFP® professional has 30 calendar days to respond to a CFP Board inquiry or complaint, unless an extension is granted by the CFP Board.

A.2 CFP Board’s Procedural Rules

Question 4

What is the maximum amount of time that the CFP Board can take to investigate a complaint?

A. 90 days
B. 180 days
C. 270 days
D. 365 days

Answer 4

B. 180 days

The CFP Board must complete an investigation within 180 days of receiving a complaint, unless the investigation involves complex issues that require more time.

A.2 CFP Board’s Procedural Rules

Question 5

What is the CFP Board’s policy on advertising for CFP® professionals?

A. Advertising must be approved by the CFP Board before it can be used
B. Advertising must comply with the CFP Board’s Advertising Standards
C. Advertising is not allowed for CFP® professionals
D. Advertising is allowed, but only in certain circumstances

Answer 5

B. Advertising must comply with the CFP Board’s Advertising Standards

CFP® professionals are allowed to advertise, but their advertising must comply with the CFP Board’s Advertising Standards, which require accuracy and truthfulness in all advertising materials.

A.2 CFP Board’s Procedural Rules

Question 6

What happens if a CFP® professional fails to pay their annual certification fee?

A. Their certification is immediately revoked
B. They are given a 30-day grace period to pay the fee
C. They are given a 60-day grace period to pay the fee
D. They are given a 90-day grace period to pay the fee

Answer 6

D. They are given a 90-day grace period to pay the fee

If a CFP® professional fails to pay their annual certification fee, they are given a 90-day grace period to pay the fee. If the fee is not paid within this time period, their certification will be suspended.

A.2 CFP Board’s Procedural Rules

Question 7

What is the maximum amount of time that a CFP® professional can take to complete their continuing education requirements?

A. 90 days
B. 180 days
C. 1 year
D. 2 years

Answer 7

D. 2 years

A.2 CFP Board’s Procedural Rules

Question 8

What is the procedure for a CFP® professional to request a reconsideration of a disciplinary action taken by the CFP Board?

A. The CFP® professional must file a written request with the CFP Board’s Appeals Committee within 30 days of the disciplinary action
B. The CFP® professional must file a written request with the CFP Board’s Disciplinary and Ethics Commission within 30 days of the disciplinary action
C. The CFP® professional must file a written request with the CFP Board’s Professional Standards department within 30 days of the disciplinary action
D. The CFP® professional is not allowed to request a reconsideration of a disciplinary action

Answer 8

A. The CFP® professional must file a written request with the CFP Board’s Appeals Committee within 30 days of the disciplinary action

A CFP® professional who wishes to request a reconsideration of a disciplinary action taken by the CFP Board must file a written request with the Appeals Committee within 30 days of the disciplinary action.

A.2 CFP Board’s Procedural Rules

Question 9

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:

If found guilty of violating the Standards of Professional Conduct, what might be a possible penalty for Ms. Meyers?

A. Monetary fine
B. A written warning
C. Revocation of her CFP® certification
D. An obligatory training session

Answer 9

C. Revocation of her CFP® certification

While the CFP Board could impose various penalties, one of the more severe consequences for severe violations is the revocation of the CFP® certification.

A.2 CFP Board’s Procedural Rules

Question 10

Jessica, a Certified Financial Planner CFP®, receives a letter of complaint from a client. According to the CFP Board’s Procedural Rules, which of the following should Jessica do first?

A. Report the complaint to the CFP Board immediately
B. Resolve the complaint with the client without notifying the CFP Board
C. Only notify the CFP Board if legal action is taken
D. Take no action unless the client escalates the issue

Answer 10

A. Report the complaint to the CFP Board immediately

CFP® professionals are required to report any client complaints to the CFP Board, especially if they relate to potential violations of the Standards of Professional Conduct.

A.2 CFP Board’s Procedural Rules

Question 11

Mark is considering becoming a CFP® professional. In terms of disciplinary actions, which of the following would prevent him from becoming certified by the CFP Board?

A. A misdemeanor for a traffic violation
B. A felony conviction for insider trading
C. A small claims court judgment for a private matter
D. A disciplinary action from a previous unrelated profession

Answer 11

B. A felony conviction for insider trading

A felony conviction, especially one related to trustworthiness and professional conduct like insider trading, would prevent someone from obtaining CFP certification.

A.2 CFP Board’s Procedural Rules

Question 12

Linda, a CFP®, learns that her colleague, Sarah, provided financial advice that wasn’t in the best interest of a mutual client. What should Linda do according to the Procedural Rules?

A. Confront Sarah privately
B. Report Sarah’s actions to their mutual employer
C. Report Sarah’s actions to the CFP Board
D. Wait for the client to take action against Sarah

Answer 12

C. Report Sarah’s actions to the CFP Board

The Standards of Professional Conduct require CFP® professionals to report any potential violations they witness to the CFP Board.

A.2 CFP Board’s Procedural Rules

Question 13

Paul, a CFP® professional, is undergoing a routine check by the CFP Board. What should he do with client files that contain sensitive information?

A. Delete them to protect client confidentiality
B. Provide them as-is to the CFP Board
C. Redact personally identifiable information before submission
D. Refuse to provide them, citing client privacy

Answer 13

C. Redact personally identifiable information before submission

While Paul should cooperate with the CFP Board, it’s essential to ensure client confidentiality by redacting sensitive information.

A.2 CFP Board’s Procedural Rules

Question 14

Which of the following is NOT a potential sanction that the CFP Board can impose on a CFP® professional found to have violated the Procedural Rules?

A. Revocation of the CFP® certification
B. A monetary fine payable to the CFP Board
C. Public censure
D. Suspension of the CFP® certification

Answer 14

B. A monetary fine payable to the CFP Board

The CFP Board does not impose monetary fines as part of its disciplinary actions.

A.2 CFP Board’s Procedural Rules

Question 15

Rebecca, a CFP® professional, was found guilty of violating the Procedural Rules. She feels the decision was unjust. What option is available to her?

A. Appeal the decision
B. Ignore the decision and continue her practice
C. Seek mediation from a third-party entity
D. Renounce her CFP® certification

Answer 15

A. Appeal the decision

CFP® professionals have the right to appeal decisions made by the CFP Board’s Disciplinary and Ethics Commission.

A.2 CFP Board’s Procedural Rules

Question 16

Peter, a prospective CFP® candidate, had a bankruptcy discharge two years ago. Is he eligible to become a CFP® professional?

A. Yes, but he must wait five years from the date of discharge
B. Yes, but he must disclose the bankruptcy to the CFP Board
C. No, anyone with a bankruptcy discharge is forever ineligible
D. Yes, but only if the bankruptcy was due to medical expenses

Answer 16

B. Yes, but he must disclose the bankruptcy to the CFP Board

Bankruptcies must be disclosed to the CFP Board, but they don’t necessarily preclude someone from becoming certified, depending on the circumstances.

A.2 CFP Board’s Procedural Rules

Question 17

Which of the following actions by a CFP® professional would most likely result in an immediate interim suspension by the CFP Board?

A. A client complaint about delayed communication
B. A felony conviction related to the professional’s financial planning activities
C. Disagreement with another CFP® professional
D. A minor administrative error in a client’s paperwork

Answer 17

B. A felony conviction related to the professional’s financial planning activities

The CFP Board takes felony convictions, especially those related to financial planning, very seriously and may impose an interim suspension while a thorough investigation takes place.

A.2 CFP Board’s Procedural Rules

Question 18

If the CFP Board decides to investigate a CFP® professional, the professional must:

A. Provide only the information that the CFP Board specifically asks for.
B. Resign their certification until the investigation is complete.
C. Cooperate fully and promptly, providing any relevant information.
D. Seek legal counsel before communicating with the CFP Board.

Answer 18

C. Cooperate fully and promptly, providing any relevant information

CFP® professionals have an obligation to cooperate fully and promptly with the CFP Board’s investigations.

A.2 CFP Board’s Procedural Rules

Question 19

What is the primary aim of the CFP Board’s Procedural Rules?

A. To protect the financial interests of the CFP Board.
B. To define the business activities of CFP® professionals.
C. To ensure the integrity and professionalism of CFP® professionals for the public’s benefit.
D. To provide a strict set of rules for financial planning.

Answer 19

C. To ensure the integrity and professionalism of CFP professionals for the public’s benefit

The primary goal of the Procedural Rules is to uphold the professionalism and trustworthiness of the CFP® mark and ensure the public can rely on CFP® professionals.

A.2 CFP Board’s Procedural Rules

Question 20

Jane, a CFP® professional, has recently been accused of violating the Code of Ethics and Standards of Conduct by one of her clients. The client alleges that Jane made a recommendation that was not in the client’s best interest, but instead, benefited Jane financially. Upon receiving this complaint, which of the following statements correctly describes the process and potential outcomes?

A. The CFP Board’s Disciplinary and Ethics Commission (DEC) will immediately investigate and determine the validity of the complaint.
B. The CFP Board Enforcement Counsel will initiate an investigation and, if valid, file a Complaint against Jane for the alleged violation.
C. Jane will receive an immediate suspension of her CFP® Certification, pending the outcome of the investigation.
D. The CFP Board will immediately publish the decision on their website and issue a press release regarding the alleged violation.

Answer 20

B. The CFP Board Enforcement Counsel will initiate an investigation and, if valid, file a Complaint against Jane for the alleged violation.

According to the provided information, the CFP Board Enforcement Counsel has the authority to investigate and file a Complaint against a Respondent (in this case, Jane) for alleged violations of the Code of Ethics and Standards of Conduct. The CFP Board’s Disciplinary and Ethics Commission (the “DEC”) only has the authority to issue a final order after the investigation and complaint process. Options A, C, and D are not the immediate steps taken upon receiving a complaint.

A.2 CFP Board’s Procedural Rules

Question 21

Maggie, a CFP® professional, has recently been under the scrutiny of the CFP Board. The Enforcement Counsel has launched an investigation into her practices. Which of the following situations could be an alleged violation that might lead to disciplinary actions against Maggie by the DEC?

A. Maggie fails to comply with the Code of Ethics and Standards of Conduct.
B. Maggie breaches the Pathway to CFP® Certification Agreement.
C. Maggie violates the Terms and Conditions.
D. All of these listed are potential violations

Answer 21

D. All of these listed are potential violations

The Enforcement Counsel has the authority to investigate and file a Complaint against a Respondent for alleged violations of; The Code of Ethics and Standards of Conduct, The Pathway to CFP® Certification Agreement, and The Terms and Conditions.

A.2 CFP Board’s Procedural Rules

Question 22

Jane, a CFP® professional, has recently been investigated by the CFP Board Enforcement Counsel for potential violations of the Code of Ethics and Standards of Conduct. Following the investigation, a Complaint has been filed against her. The case is now under review by the CFP Board’s Disciplinary and Ethics Commission (DEC). If the DEC finds Jane guilty of the alleged violations, which of the following are potential sanctions that they might impose on her?

A. A fine and community service hours.
B. A private censure or a public censure.
C. Mandatory attendance to a financial conference.
D. A recommendation letter to potential employers about the violation.

Answer 22

B. A private censure or a public censure.

According to the provided information, the DEC has the authority to issue sanctions such as a private censure, a public censure, suspension or revocation of a CFP® professional’s Certification and Trademark License, or a temporary or permanent bar on a respondent’s ability to obtain CFP® certification.

A.2 CFP Board’s Procedural Rules

Question 23

For eight years, Mark lee, a CFP® professional, faced personal and financial hardship, causing him to incur various debts and to fall behind on the taxes he owed to the IRS. Although Mr. Lee established an installment plan with the IRS, for the outstanding taxes, the IRS filed a tax lien against Mr. Lee. Following notification of the lien, Mr. Lee filed for bankruptcy under Chapter 13. What responsibility does Mr Lee have to the CFP Board?

A. Mr. Lee must provide to CFP Board written notice of the IRS tax lien within 90 days of receiving notice of the lien, and written notice of the bankruptcy filing within 90 days of that filing.
B. Mr. Lee must furnish the CFP Board with a written account of the IRS tax lien within 45 days after its notification, and a written description of the bankruptcy filing within 30 days of its occurrence.
C. Mr. Lee has no obligation to report the bankruptcy filing to CFP Board, but he must provide to CFP Board written notice of the IRS tax lien within 30 days of receiving notice of the lien.
D. Mr. Lee has no obligation to report to CFP Board either the bankruptcy filing or the IRS lien, but he must report both the bankruptcy filing and the IRS lien to the Financial Industry Regulatory Authority (FINRA).

Answer 23

B. Mr. Lee must furnish the CFP Board with a written account of the IRS tax lien within 45 days after its notification, and a written description of the bankruptcy filing within 30 days of its occurrence.

The CFP® professionals are mandated to keep the CFP Board informed of any significant financial or legal issues they might be facing. This includes informing the board about tax liens and bankruptcy filings, as these could influence their professional standing and the trust clients place in them.

A.2 CFP Board’s Procedural Rules