CoEPR and RoC Flashcards
For the purposes of the CFP examination, what does “candidate” denote?
“Candidate for CFP® certification” denotes a person who has applied to CFP Board to take the CFP Certification Examination, but who has not yet met all of CFP Board’s certification requirements.
How does CFP Board define a “client”?
A “client” denotes a person, persons, or entity who engages a certificant and for whom professional services are rendered. Where the services of the certificant are provided to an entity (corporation, trust, partnership, estate, etc.), the client is the entity acting through its legally authorized representative.
Fee-only describes a method of compensation. What restriction does CFP Board apply to the use of “fee-only”?
A certificant may describe his or her practice as “fee-only” if, and only if, all the certificant’s compensation from all his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage, or performance-based fees.
How does CFP Board define “personal financial planning”?
“Personal financial planning” or “financial planning” denotes the process of determining whether and how an individual can meet life goals through the proper management of financial resources. Financial planning integrates the financial planning process with the financial planning subject areas. Note that under CFP Board rules, financial planning may occur even if the material elements of planning are “not provided to a client simultaneously, are delivered over a period of time, or are delivered as distinct subject areas. It is not necessary to provide a written financial plan to engage in financial planning.”
Describe the four factors CFP Board uses to determine whether the material elements of financial planning exist.
The primary factors that CFP Board relies on to determine whether “material elements” exist are:
- The client’s understanding and intent in engaging the CFP professional;
- The degree to which multiple financial planning subject areas are involved;
- The comprehensiveness of data gathering; and
- The breadth and depth of recommendations.
What are the six steps of the financial planning process?
“Personal financial planning process” or “financial planning process” denotes the process which typically includes, but is not limited to, some or all of these six steps:
- Establishing and defining the client-planner relationship
- Gathering client data including goals
- Analyzing and evaluating the client’s current financial status,
- Developing and presenting recommendations and/or alternatives
- Implementing the recommendations
- Monitoring the recommendations
What types of current or past behavior will be deemed unacceptable for someone hoping to become a CFP professional?
The following current and past behavior will be deemed unacceptable and always bar someone from becoming CFP certified or reinstating their certification:
- A financial felony
- Murder/rape/violent crime within the last five years
- Revoked license
What activities will generally lead to someone potentially being barred from using the CFP marks?
The following activities will lead to someone potentially (presumed) being barred from using the CFP marks:
- Non-violent felony
- Other felonies that are not murder or rape
- Two or more personal bankruptcies
What is meant by the term “integrity”?
“Integrity” demands honesty and candor which must not be subordinated to personal gain and advantage. Certificants are placed in positions of trust by clients, and the ultimate source of that trust is the certificant’s personal integrity. Allowance can be made for innocent error and legitimate differences of opinion, but integrity cannot coexist with deceit or subordination of one’s principles.
What is meant by the term “objectivity”?
“Objectivity” requires intellectual honesty and impartiality. Regardless of the particular service rendered or the capacity in which a certificant functions, certificants should protect the integrity of their work, maintain objectivity, and avoid subordination of their judgment.
What is meant by the term “competence”?
“Competence” means attaining and maintaining an adequate level of knowledge and skill, and application of that knowledge and skill in providing services to clients. Competence also includes the wisdom to recognize the limitations of that knowledge and when consultation with other professionals is appropriate or referral to other professionals is necessary. Certificants make a continuing commitment to learning and professional improvement.
What is meant by the term “fairness”?
“Fairness” requires impartiality, intellectual honesty, and disclosure of material conflicts of interest. It involves a subordination of one’s own feelings, prejudices, and desires so as to achieve a proper balance of conflicting interests. Fairness is treating others in the same fashion that you would want to be treated.
What is meant by the term “confidentiality”?
“Confidentiality” means ensuring that information is accessible only to those authorized to have access. A relationship of trust and confidence with the client can only be built upon the understanding that the client’s information will remain confidential.
What is meant by the term “professionalism”?
“Professionalism” requires behaving with dignity and courtesy to clients, fellow professionals, and others in business-related activities. Certificants cooperate with fellow certificants to enhance and maintain the profession’s public image and improve the quality of services.
What is meant by the term “diligence”?
“Diligence” is the provision of services in a reasonably prompt and thorough manner, including the proper planning for, and supervision of, the rendering of professional services.
