Financial Planning Practices & Ethics Flashcards
What are the 6 steps of financial planning process?
- Establish terms of engagement.
- Gather info and determine goals.
- Clarify and identify problem areas.
- Develop and present financial plan.
- Implement the plan.
- Monitor the plan.
What are the 8 principles of FP Canada’s Code of Ethics?
- Duty of Loyalty to the Client - place client’s interests ahead of your own.
- Integrity - adhere to moral rules.
- Objectivity - impartiality; exercise sound judgement.
- Competence - maintain the abilities, skills, and knowledge to provide advice.
- Fairness - disclose all relevant facts, including conflicts of interest.
- Confidentiality - client info is secured, protected and maintained.
- Diligence - degree of care in handling clients’ affairs.
- Professionalism - inspires confidence and respect from client.
What is Assuris and what role do they play?
- Protects life insurance policy holders against loss of benefits due to the financial failure of a member company.
- Limits: $2,000 per month, $200,000 for death benefit and $60,000 for Cash Value – 85% of the value will be paid beyond these amounts.
What is Canadian Investor Protection Fund (CIPF) and what role do they play?
- In the event of insolvency of a member firm (such as an investment dealer/broker), CIPF steps to ensure that the property is returned to the client.
- Doesn’t protect against market losses, bad/unsuitable investment decisions, or fraud.
- Limits: $1MM in all non-registered accounts, $1MM in all registered accounts (excluding RESPs), and $1MM in RESP accounts.
What is in place to protect investors from unwanted communications?
- Canada Anti-Spam Legislation (CASL) - requires consent, ID and opt-out/unsubscribe mechanism.
- Do Not Call List (DNCL).
What type of losses (accounts) does CDIC insure against? How much?
- Bank accounts, term deposits, GICs, money orders, certified cheques
- $100,000 in RSP, RIF, TFSA.
What are the 3 stages of money laundering?
- Placement, Layering, Integration.
What 4 factors are used to determine if an advisor has a fiduciary relationship with a client?
- Vulnerability.
- Reliance.
- Trust.
- Discretion.
What are 3 client responsibilities to the financial planner?
- Provide all relevant info.
- Notify right away of any changes to financial situation or goals.
- How decisions will be made/implemented.
What’s the main difference between MFDA and IIROC?
- MFDA - SRO for regulating all sales of mutual funds by its members in Canada.
- IIROC - SRO that oversees all dealer members and trading activities on equity and debt marketplaces in Canada.
What is the Office of the Superintendent of Financial Institutions (OFSI)?
- Supervises and regulates federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight.
What is The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)?
- Facilitates the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control.
What is the Financial Consumer Agency of Canada (FCAC)?
- Responsible for protecting the rights and interests of consumers of financial products and services. It supervises federally regulated financial entities, such as banks, and strengthens the financial literacy of Canadians.
What is the Office of the Privacy Commissioner of Canada (OPC)?
- Provides advice and information for individuals about protecting personal information and enforces two federal privacy laws that set out the rules for how federal government institutions and certain businesses must handle personal information.
What is coercive tied selling?
- The illegal practice of a company providing a product or service on the condition that a customer purchases some other product or service.
