Honesty and candor allows for innocent error and legitimate difference of opinion no misleading advertising or representation of authority no misrepresentation about anything to anyone or any body act in accordance with governing legal docs when dealing with funds/property keep records promptly deliver funds to their intended place do not commingle funds unless legal and disclosed use fiduciary standard with client funds

Intellectual honesty and impartiality avoid subordination of judgement exercise reasonable and prudent professional judgement act in client's interest

wisdom to recognize knowledge limitations CE requirements = 30 hrs. every 2 years incl. at least 2 in ethics

Disclosures offered annually - COI, compensation structure Compensation fair and reasonable Form ADV may suffice as disclosure as an employee, perform services with dedication disclose outside affiliations, changes to CFP status, change of employment outside business engagements with clients should be fair and reasonable

Do not disclose client info except: As necessary in the course of business In the course of legal process In a civil dispute with the client To defend against charge of wrongdoing As necessitated by employer obligation

use marks in compliance w/CFP rules respect other professionals inform CFP board of other CFP's transgression (not related to legal process and only if known and not in breach of confidentiality) report illegal conduct in company obey laws/regulations don't engage in conduct that reflects poorly on profession register as RIA if required; no RIA after name only offer services qualified to offer return records in timely manner don't harrass other CFPs comply w/CFP renewal requirements

Only enter engagement if services are warranted and can provide them Only make suitable recommendations make reasonable investigation into financial products Render services in prompt and thorough manner Proper and supervision of subordinates

DIPOOO 1. Defining the relationship with the prospective clients or client 2. Information disclosed to prospective clients and clients 3. Prospective client and client information and property 4. Obligations to prospective clients and clients 5. Obligations to employers 6. Obligations to the CFP Board

Ethics and Standards Flashcards by Liz sylvan

Code of Ethics Principals

IOCFCPD

Integrity
Objectivity
Competence
Fairness
Confidentiality
Professionalism
Diligence

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Integrity

Honesty and candor
allows for innocent error and legitimate difference of opinion
no misleading advertising or representation of authority
no misrepresentation about anything to anyone or any body
act in accordance with governing legal docs when dealing with funds/property
keep records
promptly deliver funds to their intended place
do not commingle funds unless legal and disclosed
use fiduciary standard with client funds

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Objectivity

Intellectual honesty and impartiality
avoid subordination of judgement
exercise reasonable and prudent professional judgement
act in client’s interest

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Competence

wisdom to recognize knowledge
limitations CE requirements = 30 hrs. every 2 years incl. at least 2 in ethics

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Fairness

Disclosures offered annually - COI, compensation structure
Compensation fair and reasonable
Form ADV may suffice as disclosure
as an employee, perform services with dedication
disclose outside affiliations, changes to CFP status, change of employment
outside business engagements with clients should be fair and reasonable

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Confidentiality

Do not disclose client info except:

As necessary in the course of business
In the course of legal process
In a civil dispute with the client
To defend against charge of wrongdoing
As necessitated by employer obligation

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Professionalism

use marks in compliance w/CFP rules
respect other professionals
inform CFP board of other CFP’s transgression (not related to legal process and only if known and not in breach of confidentiality)
report illegal conduct in company
obey laws/regulations
don’t engage in conduct that reflects poorly on profession
register as RIA if required; no RIA after name
only offer services qualified to offer
return records in timely manner
don’t harrass other CFPs
comply w/CFP renewal requirements

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Diligence

Only enter engagement if services are warranted and can provide them
Only make suitable recommendations
make reasonable investigation into financial products
Render services in prompt and thorough manner
Proper and supervision of subordinates

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Rules of Conduct

DIPOOO

Defining the relationship with the prospective clients or client
Information disclosed to prospective clients and clients
Prospective client and client information and property
Obligations to prospective clients and clients
Obligations to employers
Obligations to the CFP Board

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Rule 1: Defining the relationship with the prospective clients or clients

1 Mutually agree on services
2 If financial planning, disclose obligations of each party with regard to EGADIM
3 Written agreement, PTSD: Parties, Terms under which agreement terminated, Services provided, Date and Duration
4 Always put clients needs first; if planning must do what’s BEST for client (fiduciary duty)

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Rule 2: Information disclosed to prospective clients or clients

1 Never lie
2 Disclose orally (if not planning) or in writing (if planning), 4 C’s: Compensation, Conflicts of interest, Contact information, Certificant’s areas of expertise

Must disclose changes to above in a timely fashion

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Rule 3. Prospective client and client information and property (10)

3.1 Treat information as confidential except:

As necessary in the course of business
In the course of legal process
In a civil dispute with the client
To defend against charge of wrongdoing
As necessitated by employer obligation

2 Take prudent steps to protect info
3 Must obtain nec. info to do job. If can’t, change scope of work or terminate
4 Clearly identify assets to take over
5 Keep clear records
6 Do not borrow $ unless: family member or in business of loaning $.
7 Do not lend $ unless: family member or in business of loaning $
8/3.9 Do not commingle funds unless: allowed by law, explicitly outlined to clients
10 Return clients property in a timely manner

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Treat information as confidential except:

As necessary in the course of business
In the course of legal process
In a civil dispute with the client
To defend against charge of wrongdoing
As necessitated by employer obligation

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Rule 4. Obligations to potential client or clients (7)

1 Treat clients fairly and with objectivity and integrity
2 Only offer advice in areas of competence
3 Comply with regulatory requirements
4 Reasonable and prudent judgement
5 make and/or implement only suitable recs.

4.6 provide reasonable and prudent supervision of subordinates/3rd parties

4.7 advise clients of any suspension/revocation

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Rule 5: Obligations to Employers (2)

1 Perform professional services with dedication to the lawful objectives of the employer/principal and in accordance with CFP Board’s Code of Ethics
2 Advice employer of suspension/revocation

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Rule 6: Obligations to the CFP Board (5)

1 Use marks properly, comply with professional requirements
2 meet requirements, including CE (30 incl 2 ethics every 2 yrs.)
3 Notify of change in contact info w/in 45 days
4 Notify in writing if convicted of any crime w/in 10 days of conviction
5 Do not engage in conduct that reflects poorly on profession

Always bar list

felony conviction of theft of funds or other financial crimes
felony conviction of violent crime within the last 5 years
felony conviction of tax fraud
revocation of other financial license
felony conviction of murder/rape

Presumed Bar List

2 or more bankrupcies
revocation or suspension of non-financial license
felony conviction of nonviolent crime w/in last 5 years
suspension of financial license
felony conviction of violent crime (other than murder/rape) more than 5 years ago

Forms of Discipline

Private censure
Public admonition
Suspension of CFP up to 5 years
Revocation of CFP

20 days to respond to complaint; 30 days to appeal decision

Practice Standard 100-1: Defining the scope of the engagement

mutually define

define services to be provided
cover disclosures (4 C’s, PTSD)
establish engagement duration
add’l info to limit/define

Practice Standard 200-1 Determining client’s personal and financial goals, needs and priorities (gathering client data)

Goals:

consistent w/client’s values/attitudes
provide focus, purpose, direction
clear measurable objectives
assist in recognizing unrealistic goals
limited by client disclosure

Practice Standard 200-2: Obtaining Quant info and documents (gathering client data)

obtained directly from client or other sources (interviews, questionnaires, etc)
communicate accuracy imperative
if unable to get sufficient data:
- restrict scope of work
- terminate engagement
- communicate limitations on scope

Practice standard 300-1: Analyzing and evaluating client info (Analyze and evaluate client’s financial status)

analyze info to gain understanding of financial situation and to what extent goals, needs and objective can be met by resources and current course of action
use client-specified, mutually agreed up assumptions
- personal: retirement age, life expectancy, income needs, risk factors, time horizon, special needs
- economic: interest, inflation rate, tax rate, investment returns
Determine strengths/weaknesses of current situation; restrict scope if necessary

Practice Standard 400-1: Identifying and Evaluating Financial Planning Alternatives (Developing and presenting financial planning recommendations

Consider sufficient and relevent alternatives to client’s current course of action to meet goals, needs and priorities
Take into account legal and regulatory limitations and areas of competency
more than one alternative may reasonably meet the client’s needs

Practice Standard 400-2: Developing the financial planning recommendations (Developing and presenting the financial planning recommendations)

Recommendations consistent with and affected by: * mutually defined scope of engagement * mutually defined goals, needs and priorities * quantitative data * personal and economic assumptions * analysis and eval. of clients current situation * alternatives selected by practitioner May recommend to keep current course of action May be necessary for client to revise a goal

Practice Standard 400-3: Presenting financial planning recommendations (Developing and presenting financial planning recommendations)

* assist client in understanding current situation, recommendation, and its impact on ability to meet goals, priorities and objectives * don't present opinion as fact * communicate factors critical to understanding, incl: * assumptions * interdependence of recommendations * advantages and disadvantages * risks * time sensitivity * new COI

Practice Standard 500-1: Agreeing on implementation responsibilities (Implementing the financial planning recommendations)

* mutually agree on responsibilities * client can accept/reject * any remaining disclosures (4 C's) * referrals if necessary * if planner engaged to implement, agree on scope of engagement orally or in writing

Practice Standard 500-2: Selecting prodicts and services for implementation (Implementing the financial planning recommendations)

* select appropriate products/services * investigate products/services that reasonably meet needs * must be suitable to financial situation and consistent w/goals, needs, priorities * use professional judgement and qualitative and quant. info to select products in client's best interest

Practice Standard 600-1: Defining monitoring responsibilities (Monitoring)

Mutually define monitoring responsibilities: * clarify practitioner responsibilities * explain what monitored, frequency, and communication about * monitoring may cause reinitiation of planning process * modify scope if needed