Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFP Roadmaps > Code of Ethics & Standards of Conduct > Flashcards

Code of Ethics & Standards of Conduct Flashcards

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

Code of ethics

A
  1. Act with honesty, competence and diligence
  2. Act in the 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Standards of conduct

A, Duties owed to clients

  1. Fiduciary duty:
A

a. Duty of loyalty:
- client comes first
- avoid or disclose conflicts of interest
- best interest of the client, without financial interest of the CFP

b. Duty of care:
- CFP must act with care, skill, prudence and diligence

c. Duty to follow client instructions:
- comply with objectives of the engagement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Standards of conduct

A, Duties owed to clients

  1. Integrity:
A
  • be honest
  • no fraud
  • no false statements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Standards of conduct

A, Duties owed to clients

  1. Competence:
A
  • relevant knowledge
  • bring in help from other professionals if needed
  • limit engagement if unable to provide all that is needed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Standards of conduct

A, Duties owed to clients

  1. Diligence:
A
  • provide professional service in a timely manner
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Standards of conduct

A, Duties owed to clients

  1. Disclose and manage conflicts of interest
A
  • must disclose material conflicts of interest and ensure the client is aware and approves of continuing the engagement
  • need to be sure the client understands them
  • written consent is no required, but there must be evidence that the client is aware
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Standards of conduct

A, Duties owed to clients

  1. Sound and objective professional judgment:
A
  • do not accept gifts that could compromise sound judgment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Standards of conduct

A, Duties owed to clients

  1. Professionalism:
A
  • treat clients and other professionals with dignity, courtesy and respect
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Standards of conduct

A, Duties owed to clients

  1. Comply with the law:
A

Self explanatory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Standards of conduct

A, Duties owed to clients

  1. Confidentiality and privacy:
A

Don’t share client information

a. for ordinary business, professionals who are authorized or within your firm can share info
b. for legal purposes to the extent permitted by the law can share info ex. law suit

  • firm must comply with reg S-P
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Standards of conduct

A, Duties owed to clients

  1. Provide information to a client
A

Prior to engaging in financial advice CFP must provide client with

  • description of service
  • how client pays with a full description
  • how the CFP and firm are compensated
  • contact info for regulator where records may be found about history of firm/professional
  • any other material information
  • while providing advice must provide terms of engagement
  • keep info updated and provide client with material changes
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Standards of conduct

A, Duties owed to clients

  1. Duties when communicating with clients
A

Accuracy and easily understood

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Standards of conduct

A, Duties owed to clients

  1. Duties when representing compensation method:
A

Fee only: no sales related compensation

Fee based: fees and sales related compensation

Sales related compensation: ex. commissions, trailers, 12b-1 fees, spreads, transaction fees, revenue sharing, solicitor/referral fees,

Related parities: family members or business entities that benefit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Standards of conduct

A, Duties owed to clients

  1. Duties when recommending, engaging and working with additional persons:
A

Must be open, clearly defined scope and have the client’s interest as priority

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Standards of conduct

A, Duties owed to clients

  1. Duties when selecting, using and recommending technology:
A
  • know assumptions used

- be sure it produces reliable results

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Standards of conduct

A, Duties owed to clients

  1. Refrain from borrowing or lending money and commingling assets:
A

Absolutely may not borrow or commingle.

Borrowing if permitted if:

  1. client is a family member
  2. lender is in the business of lending
17
Q

Standards of conduct

B. Financial planning and application practice standards for the financial planning process.

  1. Financial planning definition:
A

Financial planning is a collaborative process that helps maximize a clients potential for meeting life goals through Financial Advice that integrates relevant elements of the client’s personal and financial circumstances.

18
Q

Standards of conduct

B. Financial planning and application practice standards for the financial planning process.

  1. No client agreement to engage in financial planning:
A

Limit or terminate the engagement

19
Q

Standards of conduct

C. Practice standards for the financial planning process:

  1. Understanding the client’s personal and financial circumstances:
A
  • Obtaining qualitative and quantitative information

Qualitative examples: health, life expectancy, family circumstances, values, attitudes, expectations, earnings potential, risk tolerance, goals, needs, priorities, current course of action

Quantitative examples: age, dependents, other advisers, income, expenses, cash flow, savings, assets, liabilities, available resources, education and retirement accounts, benefits

  • If information is incomplete must limit or terminate the engagement
20
Q

Standards of conduct

C. Practice standards for the financial planning process:

Seven steps:

A
  1. Understanding the client’s personal and financial circumstances
  2. Identifying and selecting goals: need to prioritize
  3. Analyzing the client’s current course of action and potential alternative course(s) of action.
  4. Developing the financial planning recommendation(s)
  5. Presenting the financial planning recommendation(s)
  6. Implementing the financial planning recommendation(s): identify who is responsible for what
  7. Monitoring progress and updating
21
Q

Standards of conduct

D. Duties owed to firms and subordinates

A
  • Use reasonable care when supervising
  • Complying with lawful objectives of CFP professionals firm: the firm is not subject to discipline by CFP Board
  • Provide notice of public discipline: promptly in writing to the firm
22
Q

Standards of conduct

E. Duties owed to CFP Board

Definition:

A
  • Felony: fine of at least $1,000
  • Relevant misdemeanor: criminal offence, ex. fraud, theft, alcohol or drug related, dishonest conduct
  • Regulatory investigation: by fed, state, foreign government, regulatory authority
  • Regulatory Action: by fed, state, foreign government, regulatory authority
  • Civil action: lawsuit, arbitration, mediation
  • Finding: adverse final action

Minor rule violation: violation of minor rule, fine of $2,500 or less

23
Q

Standards of conduct

E. Duties owed to CFP Board

Reporting: within 30 days

A

WRITTEN NOTICE WITHIN 30 DAYS

  • Charged and convicted of a felony or relevant misdemeanor
  • Subject to reg investigation, or named adversely in a finding
  • mentioned in a civil action allegation
  • civil judgement, settlement of less than $15,000
  • found fraudulent
  • had professional license revoked
  • terminated for cause
  • part of any customer initiated complaint linked to forgery, theft, sales practice violations etc

Must provide this in writing and cooperate

CFP Roadmaps (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions