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CFP General Principles > Ethics and Standards > Flashcards

Ethics and Standards Flashcards

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CFP® flashcards
1
Q

What is the appeals committee?

A

Made up of CFP professionals who have the authority to issue CFP Board final decisions

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2
Q

What is the CFP Board counsel?

A

They have the authority to investigate respondent for alleged violations of code and standards

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3
Q

What is the disciplinary and ethic committee?

A

Composed of CFPs who have the authority to enter a final order, that determines whether a violation has occurred and where appropriate, impose discipline

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4
Q

What is the fiduciary requirement to engage the client with care, skill, prudence, and diligence, called?

A

Duty of Care

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5
Q

What is duty of loyalty?

A

The fiduciary requirement to place the clients interest ahead of my own, my firm, or any other entity

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6
Q

What is the duty to consult?

A

The fiduciary duty to consult with an expert in the area of FP, when that area exceeds the competence of the CFP

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7
Q

What is the duty to diagnose?

A

A fiduciary requirement to know the needs of my clients and to investigate the suitability of products that would be complimentary to the needs of the client

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8
Q

What is the duty to disclose?

A

A fiduciary requirement to disclose all material facts and all conflicts of interest, putting the clients interest ahead of my own

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9
Q

What is the duty to keep current?

A

A fiduciary duty to stay on top of changes to the ever-changing law, product offerings, and the entire industry over time, in order to provide clients with the most current information

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10
Q

Planning fees + sales related compensation = ?

A

Fee-based compensation

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11
Q

Only planning fees, no sales-related compensation = ?

A

Fee-only compensation

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12
Q

What is a fiduciary?

A

An affirmative duty of utmost good faith, and full and fair disclosure of all material facts

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13
Q

What is financial advice?

A

Communication, that based on its content, context, and presentation, would reasonably be viewed as a recommendation for the client to refrain or take a course of action

The exercise of discretionary authority over the financial assets of a client

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14
Q

What is financial planning?

A

A collaborative process that helps maximize a clients potential for meeting life’s goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances

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15
Q

What is the purpose of the fitness standards?

A

Determines whether or not an individual is fit to be a CFP

The most egregious felonies, will bar. Problems with bankruptcies and financial crimes is most likely to bar.

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16
Q

Who makes up the hearing panel?

A

A minimum of 3 individuals, two of which are CFPs and one DEC

17
Q

What are integration factors?

A

Variables that weigh in determining whether financial advice requires financial planning

18
Q

What does an interim suspension mean to a CFP?

A

The respondent must remove all marks and prove so within 10 days of receipt of the suspension order

19
Q

What is a permanent bar?

A

Prohibits a respondent from ever applying for CFP marks in the first place

20
Q

An unpublished written reproach of respondent actions

A

Private censure

21
Q

A published written reproach of respondent actions

A

Public censure

22
Q

What are relevant elements?

A

Goals, assets and liabilities, cash flow, management risks, financial health, educational needs, financial security, increasing wealth, tax considerations, retirement planning, philanthropic, estate and legacy

23
Q

What is a revocation?

A

A permanent bar of the CFP marks

24
Q

What are the six principles of ethics?

A

Act with honesty, integrity, competence, and diligence

Act in the clients best interest

Exercise due care

Avoid / disclose and manage conflicts of interest

Maintain confidentiality and protect privacy

Actions reflect positivity on CFP

25
Q

What are the standards of conduct?

A

Duties owed to clients

FP & application fo the practice standards

Practice standards

Duties owed to firms and subordinates

Duties owed to CFP board

Prohibition on circumvention

26
Q

What are the terms of a suspension?

A

A period of time in which the respondent is still subject to the terms and conditions of the CFP trademarks, but is not allowed to use them for no less than 90 days and no more of 5 years.

27
Q

What is a temporary bar?

A

A period of time in which a respondent cannot apply for CFP marks

28
Q

Who do the CFP fitness standards apply to?

A

Anyone not yet a CFP

CFP General Principles (8 decks)

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