Ch.3 - Ethics, Professionalism, and Practice Standards Flashcards
The number one influence on an executives ethical decision making is their…
personal code of ethics
Ethics represents the underlining aspect of trust between an advisor and…
client
What holds businesses, the economy, and society together?
Ethics
Laws are written based on what a government considers ___________________ of conduct.
minimum standards
In order to be ethical an individual must follow the…
law
True or false. Legal problems are relatively clear cut and are more easily defined then ethical problems.
True
Laws can be written to address certain aspects of __________, such as stealing.
morality
What are used as benchmarks to measure the conduct of an advisor?
Ethical codes
Holder of an American College designation is subject to the…
professional pledge and 8 cannons.
The American College professional pledge requires the holder of the designation to render services to others which, under the same circumstances, they would apply to…
themselves.
If you violate the American College pledge what are the consequences?
Temporary or permanent suspension
What are the eight canons of the American college code of ethics?
(HOPDECKS)
- Honor and dignity
- Obey laws
- Publicize achievements
- Don’t dishonor the American College
- Encourage/help other professionals
- Continuing education
- Keep a record
- Support institutions
If you violate the CFP Board’s Professional Standards code of ethics, what could be the consequence?
You can lose your certification
If someone violates the CFP Board’s code of ethics can you take them to court and sue them?
No.
Who does the CFP Board’s code of ethics apply to?
Current CFP professionals and candidates for the certification
What are the CFP 7 Code of Ethics Principles?
ICOCFPD
7 Code of Ethics Principles
- Integrity
- Competence
- Objectivity
- Confidentiality
- Fairness
- Professionalism
- Diligence
CFP Professional standards are established in their…
Rules of Conduct
For CFP professionals, what are the 6 Rules of Conduct?
DDCOOO
- Defining the relationship with the prospect/client
- Disclosure to prospect/client
- Confidentiality of prospect/client information/property
- Obligations to prospect/client
- Obligations to employers
- Obligations to CFP Board
CFP Board has Practice Standards that are organized on the financial planning domains and are intended to do what three things?
(EAE)
- Establish norms
- Advance professionalism
- Enhance value
Does the CFP Board’s Practice Standards have a step-by-step procedure for providing services?
No
Name the six parts of the Practice Standards created by the CFP Board.
100–1: (scope) defining the scope of engagement
200–1: (goals) determine clients financial goals, needs, and priorities
200–2: (data) get quantitative info
300–1: (analyze) analyze clients information
400–1: (recommendations) come up with financial alternatives
400–2: (plan) put together the recommended financial plan
400–3: (discuss) Present recommendations
500–1: (agree) agreed on the plan
500–2: (implement) select the products to be implemented
600–1: (monitor) monitor the plan
Advisors should be encouraging the clients to purchase products, they should not…
pressure the clients into buying products.
What is a major component of the financial planning process?
client-focused selling
A professional should have 4 characteristics. What are they?
CASE
- Code of Ethics
- Altruistic or unselfish
- Specialized knowledge
- Entry requirements
Historically, courts held professionals to a higher standard than…
non-professionals.
The fiduciary standard of professional behavior places an expectation that professionals…
put the clients best interest above anything else and know the law.
What are the 9 hallmarks of professional behavior for a financial advisor?
(SKLARHEEM)
Service Know risk tolerance Listening Answering questions Refer to experts Handle matters appropriately Education background Educate the client Maintain knowledgebase
7 themes for adviser code of ethics
Best interest Conduct themselves fairly, objectively, and honestly Protect confidentiality Disclose sufficient information Continue education Elevate the profession Comply with laws