CFP Codes And Standards Flashcards
Code of Conduct:
- Act with honesty, integrity, competence and diligence.
- Act with clients best interests
- Exercise due care
- Avoid, disclose, and manage conflicts of interest
- Maintain confidentiality
- Act in a manner that reflects well on CFP certification
Standards of conduct:
Duties owed to clients
1) The fiduciary standards:
- honors the clients interest above all
2) The duty of loyalty
- holds interest of clients above own/form
- balance conflicts of interest
3) The duty of care
- acts with skill, prudence, diligence of a prudent profession
4) The duty to follow client instructions
- Follow client instructions presuming they are reasonable and lawful
Standard of Conduct:
The application of the practice standards
- provide planning/advice that integrates relevant elements of the clients circumstances
- act in clients best interest
- enable client to perceive that they have received financial planning
Consideration if financial planning has taken place:
If client has agreed to engage the CFP for financial planning
What must the CFP document in writing?
1) the obligation to act in clients best interest (BI form)
2) the CFP’s professional policies
3) the firms procedures
4) the significance of the info
Duties owed to the CFP board
CFP must not pursue conduct that would be deemed to have adversely affect integrity or have negative perceptions of the CFP marks and financial planning
- refrain from adverse conduct t
- reporting
- provide narrative statement
- compliance with terms and conditions of certification
CFP board reporting requirements
Within 30 days - in writing!
What must be reported to the CFP board?
Within 30 days - in writing
- customer complaint > $5,000
- settling for sales practice violations > $15,000
- personal/firm bankruptcy when CFP was in a control position
CFP board Disciplinary committee is called what?
DEC - Disciplinary and Ethics Commission
DEC can do what disciplinary actions?
- public letter of admonition
- suspension up to 5 years
- permanent revocation of marks
Appealing to DEC
Must be filed within 30 days OF THE NOTICE of the adverse ruling.
*By submitting a “petition for appeal”
Duties owed to firm
- must comply with employing firms policies
- notify the firm of any public discipline by the DEC
- use reasonable care when supervising
Duties owed to the clients (at all times)
At all time:
- integrity
- competence
- diligence
- sound judgement
- professionalism
- confidentiality
- duties when representing compensation method
- duties when selecting/using technology
- refrain from commingling assets
Duties owed to the clients: when providing financial advice
Duties at all times +
- fiduciary duty
- disclose and manage conflicts of interest
- provide information to the client
- duties when recommending additional persons
Duties to clients: when providing financial planning
Duties that apply to at all times and when providing financial advice:
Plus:
- the practice standards for the financial planning process
- information to a client in writing
Fiduciary duty includes:
Duty of loyalty
Duty of care
Duty to follow client instructions
