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Fundamentals of CFP > CFP JUSTICE > Flashcards

CFP JUSTICE Flashcards

CFP req and regulations but more internal focused

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
1
Q

Rule of thumb for CFP marks on LinkedIn and stuff

A

Should always be associated with a specific name or approved noun (e.g. professional)

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2
Q

Lifetime permanent bar from being a CFP (5 things)

A
  1. Theft, embezzlement, or other financial crimes
  2. Tax fraud or other tax crimes
  3. Any degree murder or rape
  4. Revocation of financial professional license (unless admin related)
  5. Felony conviction of any violent crime in the last 5 years.
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3
Q

An individual is presumptively barred from CFP if… (5 things)

A
  1. Revocation/suspension of NON-financial professional license (unless admin related)
  2. 2+ personal or business bankruptcies
  3. Suspension of Financial professional license (unless admin related)
  4. Felony conviction of violent crimes (not murder/rape) more than 5 years ago
  5. Felony conviction of non-violent crimes within 5 years
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4
Q

A CFP must notify the board in writing if the CFP has… (4 things)

A
  1. Declared bankruptcy
  2. A tax lien placed on CFP property
  3. Been charged, investigated, or named in virtually ANY official proceeding
  4. Been mentioned adversely in a civil action (including arbitration) or criminal action
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5
Q

List the 6 Codes of Ethics

A
  1. Act with honesty, integrity, competence, and diligence
  2. Act in **client’s best interest
  3. Exercise due care
  4. Avoid or disclose and manage conflicts of interest
  5. Maintain the confidentiality and protect the privacy of client information
  6. Act in a manner that reflects positively on the financial planning profession and CFP certification
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6
Q

List the 6 CFP Standards of Conduct that flow from 6 Codes of Ethics

A
  1. Fiduciary Duty
  2. Financial Planning and Application of the Practice Standards for the Financial Planning Process
  3. Practice Standards for the Financial Planning Process
  4. Duties owed to firms and subordinates
  5. Duties owed to CFP Board
  6. Prohibition on Circumvention
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7
Q

CFP Fitness Standards Sequential 3 Step Approach

A
  1. Conduct deemed unacceptable
  2. Conduct presumptively deemed unacceptable
  3. Appeals Process
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8
Q

If providing Financial Advice a CFP must disclose answers to these questions no matter what… (4 things)

A

-What products and services will be provided?
-How much will this cost in total?
-How are you, your firm, affiliates, and other parties compensated?
-Have you been publicly sanctioned or have you declared bankruptcy?

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9
Q

True or False

A CFP is responsible for the correct implementation of Financial Advice even if not selling financial products

A

TRUE

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10
Q

Terms of Engagement need to be provided to a client only if…

A

Financial Planning is provided

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11
Q

How must the privacy policy be explained to the client?

A

In writing at least

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12
Q

What is a Regulatory Action in the eyes of the CFP board?

A

An action initiated by
-fed gov agency
-state gov agency
-local gov agency
-foreign gov agency
-self-regulatory org
-other regulatory authority

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13
Q

What is a Regulatory Investigation in the eyes of the CFP Board? And what is it not?

A

Investigation initiated by
-fed gov agency,
-state gov agency,
-local gov agency,
-foreign government agency,
-self-regulatory organization,
-other regulatory authority.

Doesn’t include:
-preliminary/routine inquiries
-request for info
-blue sheet requests
-deficiency letters
-trading questionnaires
-etc

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14
Q

What is a Minor Rule in the eyes of the CFP Board?

A

A violation of an SEC or self regulatory organization’s minor rule violation

(sanction = $2500 or less and CFP doesn’t contest)

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15
Q

What is a Felony in the eyes of the CFP Board?

A

Any crime (even a misdemeanor) that is punishable with 1+ years of incarceration or a fine of +$1,000

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16
Q

What is a Relevant Misdemeanor in the eyes of the CFP Board?

A

Not a felony;

Criminal offense for conduct involving: fraud, theft misrepresentation, violence, or a second (or more) alcohol /drug related offense

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17
Q

What is a Civil Action in the eyes of the CFP Board?

A

Lawsuit or Arbitration

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18
Q

What is a Finding in the eyes of the CFP Board?

A

An adverse final action AND a consent decree

(consent decree = “I don’t plead guilty or not-guilty; no contest”)

19
Q

What is a “Complainant?”

A

Person alleging misconduct

20
Q

What is a “Client?”

A

Any person, business organization, or legal entity to whom a CFP provides or agrees to provide professional services pursuant to an engagement.

21
Q

What is a “Related Party?”

A

Family member or Business entity (including a trust) whose receipt of sales-related compensation would benefit CFP

(Related parties can make fee only engagements fee based/commission and fee)

22
Q

What is “Control?”

A

Power, directly/indirectly, to direct the management or policies of the entity at the relevant time, through ownership, by contract or otherwise

23
Q

What is a “Control Person?”

A

Person who has control

24
Q

What is an “Engagement?”

A

An oral/written agreement, arrangement, or understanding

25
Q

What is “Family?”

A

Any family member that the CFP directly/indirectly supports financially.

(steps, in-laws, & domestic partners included)

26
Q

How does a “Conflict of Interest” work? (2 main ways)

A

-CFP interests/firm’s interest are adverse to duties to client

-Duties to client A are adverse to client B

27
Q

What is “Material?”

A

Information is material when a reasonable client or prospective client would consider the information important in making a decision

28
Q

What is a “Respondent?”

A

An individual subject to CFP Board authority who must respond to a CFP Board proceeding

29
Q

3 types of people subject to CFP Board authority?

A

CFP, candidate for CFP, and professionals eligible for re-instatement

30
Q

7 Steps of the Disciplinary Process

A
  1. Request for investigation
  2. Investigation
  3. Request for documents and information
  4. Probable cause determination
  5. Hearing Panel
  6. Disciplinary and Ethics Commission
  7. Appeals committee
31
Q

List the 4 possible sanctions of a CFP certificant and which ones could potentially be public

A
  1. Private Censure - private
  2. Public Censure - public
  3. Suspension - public
  4. Revocation - public
32
Q

As a CFP you are not required to inform a client within 90 days that you’ve been ____ by the CFP Board

A

privately censured

33
Q

What form should a Standard-E report take?

A

Narrative with no lying

34
Q

When faced with the option of breaking your firm’s rules or CFP rules, which do you break?

A

Firm’s rules; CFP is the ultimate authority

35
Q

These 7 things are grounds for discipline (sanction) by CFP Board

A
  1. Code violation
  2. Noncompliance w/ standards
  3. Criminal violations
  4. Professional discipline
  5. Disciplinary violation
  6. Failure to respond
  7. Lying to CFP Board
36
Q

The Disciplinary and Ethics Commission is _____ in a hearing (compare to legal trial)

A

Judge

37
Q

“Failure to Respond” is grounds for discipline (sanction).

What does “Failure to Respond” mean? (3 things)

A

-Failure to respond to a request by CFP
-Obstruction of DEC (or any panel thereof)
-Obstruction of CFP board staff

38
Q

Key amount of days for Disciplinary process & exception

A

30 days;

Exception: respondent has 14 calendar days to respond to subsequent requests for documents.

39
Q

True or False

Hearing Panel is 3 person panel that acts as jury in hearing

A

True; they decide if allegations are proven or unproven

40
Q

True or False

CFP Board Counsel defends the Respondent in a hearing before the Hearing Panel

A

FALSE; they do investigation and prosecute respondent

41
Q

If suspended for over 1 year, what is the latest and earliest the respondent can file petition for reinstatement?

A

Latest: No later than 5 years after 1st day of suspension

Earliest: As early as 6 months before suspension ends

42
Q

If suspended for 1 year or less, what is the latest and earliest the respondent can file petition for reinstatement?

A

Latest: No later than 5 years after suspension begins

Earliest: As early as 30 days before suspension ends

43
Q

The DEC responds to petitions with 1 of 3 determinations…

A
  1. Grant petition
  2. Deny petition but allow re-application
  3. Deny petition
44
Q

True or False

If a potential certificant has committed an act considered a permenant bar, they can petition. It just probably will not work.

A

False; Only presumptive bars are eligble for petition

Fundamentals of CFP (8 decks)

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