Fiduciary Responsibilities And Fitness Standards

Question 1

What are the three approved methods of documentation?

Answer 1

CRM, handwritten notes, emails

Question 2

For disclosures for Financial Advice, what is the only item that is required to have a written disclosure (as opposed to verbal OR written)

Answer 2

Privacy Policy

Question 3

For Financial Planning, all disclosure items must be in writing, except for:

Answer 3

Material conflicts of interest

Question 4

What are the 7 Steps of the Financial Planning Process?

Answer 4

1. Understanding Client’s Personal and Financial Circumstances
2. Identifying and Selecting/Prioritizing Goals
3. Analyzing Client’s Current Course of Action and Potential Alternative Course(s) of Action
4. Developing Financial Planning Recommendations
5. Presenting Financial Planning Recommendations
6. Implementing Financial Planning Recommendations
7. Monitoring Progress and Updating

Question 5

Acronym for 7 step financial planning process

Answer 5

Umbrellas In A Downpour Prevent Immense Mess

Question 6

For Financial Advice, when must the written privacy policy be provided?

Answer 6

Initially: At the time of the
Engagement.
Required Updates: Not less
than annually (at least once
in any 12-month period)
unless:
i. Your policies have not
changed since the last
notice sent to the Client;
and
ii. You do not disclose
non-public personal
information other than
as permitted without a
Client’s consent.

Question 7

For Financial Advice or Planning, when must you disclose Public Discipline and Bankruptcy?

Answer 7

Within 90 days

Question 8

Framing Bias

Answer 8

You process and respond to information based on the manner in which it is presented. Under this concept, individuals often choose a guaranteed positive outcome (while avoiding a chance of greater gain that also carries the possibility of no gain at all), but they will take a chance to avoid a negative outcome (rather than taking a certain smaller loss).

Question 9

Recency Bias

Answer 9

You give recent information more importance because you remember it most distinctly.

Question 10

Herding

Answer 10

When investors trade in groups

Question 11

Fiduciary Duties

Answer 11

• duty of loyalty
• duty of care (requires competency & to know whats in the best interest of client)
• duty to disclose & manage conflicts
• duty to diagnose (i.e. consider all circumstances)
• duty to keep current

Question 12

Following conduct is unacceptable & will always bar an individual from becoming certified

Answer 12

• felony conviction for theft, embezzlement, or other financially-based crimes
• felony conviction for tax fraud or other tax-related crimes
• Revocation of a financial (e.g. registered securities representative, broker/dealer, insurance, accountant, investment advisor, financial planner) professional license, unless the revocation is administrative in nature, i.e. the result of the individual determining not to renew the license by not paying the required fees.
• felony conviction for any degree of murder or rape
• felony conviction for any other violent crime within last 5 years

Question 13

Transgression presumed to be unacceptable and bar certification, unless Disciplinary and Ethics Commission (DEC) reconsiders after review. List includes:

Answer 13

• two or more personal or business bankruptcies
• Revocation or suspension of non-financial professional (ex. real estate, attorney) license, unless administrative in nature
• Suspension of financial professional license, unless admin in nature
• felony conviction for non-violent crimes (including perjury) within last 5 years
• Felony conviction for violent crimes other than murder or rape that occurred more than 5 years ago

Question 14

What must candidate who committed transgression on presumptive bar list do

Answer 14

Petition DEC for reconsideration and determination. If professional revocation or suspension is vacated or felony conviction is overturned, candidate may submit new petition

Question 15

Following DEC’s review of petition, DEC may do following

Answer 15

• Grant petition and give the professional their marks
• Deny petition after determining conduct reflects adversely on individual’s fitness and permanently bar
• Deny petition but allow individual to re-apply for CFP certification after period not to exceed 5 years

Question 16

Can a DEC’s decision regarding a petition be appealed?

Answer 16

Yes, it may be appealed through the Appeals Committee of the Board of Directors of the CFP

Question 17

Parties involved in disciplinary and appeals process - Respondent

Answer 17

Any person who has agreed to CFP board’s terms and conditions

Question 18

CFP Board Counsel

Answer 18

Authority to investigate and issue a complaint against a respondent for alleged violation of a) code of ethics and standards of conduct or b) CFP certification candidate agreement

Question 19

Hearing Panel

Answer 19

When formal complaint is filed, hearing takes place before panel of minimum of three individuals. At least one member of every panel will be of the DEC and at least two member must be CFP professionals. Respondent is entitled to appear in person or telephonically, be represented by counsel, cross-examine witnesses, and present evidence on own behalf.

Question 20

Disciplinary and Ethics Commission (DEC_

Answer 20

The hearing panel submits its findings for review to the DEC for review consideration. The DEC is “composed primarily of CFP® professionals, has the authority to enter a final order that finds facts, determines whether a violation has occurred and, where appropriate, imposes discipline.”

The DEC is actively involved in the consideration of cases involving a presumptive bar of a candidate for CFP® certification or Professionals Eligible for Reinstatement (PER) in accordance with the guidelines presented in the Fitness Standards.

Question 21

Appeals Committee

Answer 21

The “CFP Board Counsel or Respondent may appeal a final order to CFP Board’s Appeals Committee of the Board of Directors (‘Appeals Committee’). The Appeals Committee is composed primarily of CFP® professionals and has the authority to issue CFP Board’s final decision.” The Appeals Committee is composed of up to four members of the Board of Directors (formerly Board of Governors), at least two of whom are first-year members of the Board. Members of the Appeals Committee may not be members of the DEC.