Ethics and Law Flashcards
Job Task Domains
- Establishing and defining the client planner relationship
- Gathering information necessary to fulfill the engagement
- Analyzing and evaluating the client current financial status
- Developing recommendations
- Communicating recommendations
- Implementing recommendations
- Monitoring recommendations
- Practicing within professional and regulatory standards
Domain 1
Establishing and defining client planner relationship:
- Identify the client (individual, business, family..)
- Discuss needs and expectations
- Discuss process with the client
- Explain the scope of services offered
- Assess ability to meet clients needs and expectations
- Discuss responsibilities
- Define and document the scope of the engagement
- Provide Disclosures (regulatory, compensation, conflicts of interest)
Domain 2
Gather information necessary to fulfill engagement: Qualitative 1. explore needs, priorities, and goals 2. explore time horizon for each goal 3. assess knowledge and experience 4. assess risk exposure 5. assess risk tolerance Quantitative 6. assets, liabilities, income, expenses, estate planning docs, education plan resources, retirement plan info, gov benefits, tax docs, investment statements, insurance policies, business docs, inheritances..)
Domain 3
Analyzing and Evaluating Client’s Current Financial Status
1. Evaluate strengths and weaknesses of financial situation (balance sheet, cash flow, budget, capital needs, insurance, retirements, investments, tax, estate, business, education, etc…
- Identify tools and techniques to conduct analysis
Domain 4
Developing the Recommendations
- Synthesize findings
- Consider alternatives
- Consult other professionals
- Develop recommendations
- Document recommendations
Domain 5
Communicating Recommendations
1. Present the financial plan
goals, assumptions, observations, alternatives,
recommendations
2. Obtain feedback and revise if necessary
3. Provide documentation of recommendations and disclosures
4. Verify acceptance
Domain 6
Implementing Recommendations
- prioritize and create a timeline
- assign responsibility
- support client with implementation
- share as authorized
- define monitoring responsibilities
Domain 7
Monitoring the Recommendations
- Evaluate changes to client situation
- Review performance and progress
- Review changes in economic environment
- Make recommendation
- Review scope of work and redefine engagement
- Ongoing support
Domain 8
Practice within Professional and Regulatory Standards
- CFP Code of ethics
- Disciplinary rules and procedures
- Financial planning practice standards
- Manage practice risk
- Maintain awareness and comply with regulatory standards.
Code of Ethics and Professional Responsibility Principles
IOC FCPD International Olympic Comittee is Fair, Competent and Proficient Daily Integrity Objectivity Competency Fairness Confidentiality Professionalism Diligence
Rules of Conduct
RIPOOO
Rule 1 - Relationship with client (define)
Rule 2 - Information disclosed to prospective client
Rule 3 - Property of client
Rule 4- Obligation to client
Rule 5 - Obligation to employer
Rule 6- Obligations to CFP Board
Financial Planning Practice Standards
100- Establishing and defining the relationship with the client (Domain 1)
200 - Determining the clients personal and financial goals, needs and priorities (Domain 2)
300 - Analyzing and evaluating the clients financial status (Domain 3)
400-1 Identifying and evaluating planning alternatives (Domain 4) May consult others
400-2 Developing financial planning recommendations (Domain 4)
400-3 Presenting Financial Planning recommendations (Domain 5) Advantages/disadvantages
500 Implementing financial planning recommendations (Domain 6)
600 Defining monitoring responsibilities (Domain 7)
1985
Year CFP board was founded
Costs that must be disclosed
Code of conduct Rule 2.2 12b-1 Cash bonuses, incentives received for selling product Trailing commissions Compensation from wrap fees Trading fees (if passed to client) Ticket charges (if passed to the client) Admin or management fees on products Solicitation fees etc..
Continuing Education
30 hours per reporting period
*note depending on your birthday may be less than 30 hours the first reporting period only (could be less than 2 years)
Disclosures in Writing
Parties to the agreement Date and duration Terms under which agreement can end Services to be provided Specific compensation arrangements Summary of conflicts of interest Area of expertise Contact Information
Annually there after:
Cost and compensation
other sources of comp paid to CFP or employer
Verbal Disclosures
Can be in writing but not required..
Obligation/ Responsibility of parties
General compensation to any party or affiliate
Terms by which proprietary products can be offered
Terms by which other entities can be used
(must be given time to review if in writing)
Included in Brochure
Written disclosure to client detailing
-Advisory Service provided and fees
-Types of securities and investments
-Education and background of the Adviser
-Participation or interest in securities transactions
-MUST be given 48 hrs prior to entering into contract or at the time of contract but client has 5 days to “look and see”
ADVII
Notifying the board -contact info change or crime conviction
Contact info- 45 days email telephone physical address etc
Convicted of crime- 10 calendar days
*no misdemeanor traffic violations unless involve drugs and alcohol
ALWAYS bar from CFP
Felony-theft, embezzlement, financial crimes, tax fraud, tax crimes.
Revocation of financial professional designation unless administrative in nature (like not renewing) includes accountant
Felony conviction - murder or rape
Felony violent crime 5 years
Presumed Unacceptable - conduct
- 2 or more bankruptcy in last 5 years
- Revocation of non-financial professional-real estate, attorney.
- Suspension of financial professional license
- Felony conviction non-violent crimes (perjury) last 5 years
- Felony conviction violent crimes other than murder or rape more than five years ago
