Fundamentals and Insurance Flashcards
A CFP Professional Must:
Act with honesty, integrity, competence, and diligence
Act in the client’s best interests
Exercise due care
Maintain the confidentiality and protect the privacy of client information
Act in a manner that reflects positively on the financial planning profession and CFP certification
Key words relating to Fiduciary Duty
Duty of Loyalty, Duty of Care, Follow Instructions
Key words relating to Integrity
Honesty, Upstanding, Candor
Key words relating to Competence
Relevantly Apply Knowledge
Key words relating to Diligence
Timely, Thorough
Key words relating to Disclose and Manage Conflicts of Interest
Active Consent, Disclosure, Manage, Material Conflict, Ambiguity
Key words relating to Sound and Objective Professional Judgement
Exercise judgement, not subordinated
Key words relating to Professionalism
Dignity, Courtesy, and Respect
Key words relating to Comply with the Law
Laws, Rules, Regulations, Standards
Key words relating to Confidentiality and Privacy
Consent, Ordinary Business, Legal and Enforcement Purposes, Policies
Key words relating to Provide Information to a Client
Financial Advice, Financial Planning
Key words relating to Communicating with a Client
Reasonable, Expected to Understand, Avoid Complexity
Key words relating to Duties when Representing Compensation
Fee-Only, Fee-Based, Sales Related Compensation, Soft Dollars, Non-Monetary Benefits, Related Party
Key words relating to recommending, Engaging or Working with Additional Person
Reasonable Basis, Reputation, Experience, Qualifications, Disclosure, Reasonable Care
Key words relating to Selecting and Using Technology
Reasonable Care and Judgement, Level of Understanding
Key words relating to Refrain from Borrowing or Lending Money and Commingling
Commingle, Client Assets, Borrow, Lend
What is Fiduciary Duty
At all times when providing Financial Advice to a Client, a CFP Professional must act as a fiduciary, and therefore act in the best interests of the Client
What 3 duties does a CFP always have?
Duty of Loyalty
Duty of Care
Duty to Follow Client Instructions
What is the obligation of integrity?
Obligation of Integrity requires a CFP professional to be honest and upstanding
What must you do when you have a conflict of interest?
Disclose and manage
What are the exceptions to the confidentiality and privacy policy?
Business or legal and enforcement purposes
What are the 3 compensation models and which one does the CFP Board prefer?
Fee-Only
Fee-Based
Sales-Related Compensation
The CFP Board does not have a preferred compensation model.
What is the definition of Financial Planning?
Financial Planning is a collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances
When must a CFP follow practice standard?
When performing financial planning, financial advice that requires financial planning, or when the Client has a reasonable basis to believe the CFP professional will provide or has provided Financial Planning
What must you do if a Client does not agree to engage the CFP professional to provide financial planning?
Not enter into the engagement, limit, provide service after explaining how Financial Planning would benefit them, or terminate the engagement
