Fundementals Flashcards
Which of the following is not an element of the CFP Board Code of Ethics?
Exercise Due Care
Manage Conflicts of Interest
Maintain Confidentiality
Act with Knowledge and Skill
CFP professional’s Duties Owed to Clients states to make recommendations with skill and care.
Act with Knowledge and Skill is not an element of the Code of Ethics.
Which of the following is not an element of the CFP Board Code of Ethics?
Act with Honesty
Act with Integrity
Act with Accuracy
Act with Competence
Accuracy is not an element of the CFP Board Code of Ethics.
When is a CFP held to the CFP Code of Ethics?
- When Recommending Financial Assets?
- When Practicing Financial Planning?
A CFP is held to the CFP Code of Ethics when:
Recommending Financial Assets
When Practicing Financial Planning
When must the CFP act as a fiduciary?
At all times when providing financial advice.
What are the elements of the CFP Board requirement of Fiduciary Duty?
Duty of Loyalty
Duty of Care
Duty to Follow Client Instructions
How would you describe the Duty of Integrity?
Integrity requires a CFP to be honest and outstanding in their professional obligations. A CFP professional is allowed innocent, unintentional mistakes. They must disclose facts to the client. A client may be defined as a non-person entity.
The Duty requiring a CFP to reasonably investigate financial products recommended to clients is an example of what?
To act with the Client’s best interest in mind.
May a CFP share client and account details in the course of ordinary business between partner or affiliated firms?
No.
Describe the “presumed list” for purposes of determining fitness to practice.
Two or more personal or business bankruptcies
Revocation of license for nonadmin reasons
Suspended as a financial professional license for nonadmin reasons
Felony conviction for nonviolent crimes (including perjury) within last five years
Felony conviction for violent crimes
Describe the “always” list” for purposes of determining fitness to practice.
Felony conviction for theft, embezzlement or other financially based crimes
Felony conviction for tax fraud or other tax-related crimes
Revocation of financial professional license for nonadmin purposes
Felony conviction for any degree of murder or rape
Felony conviction for any other violent crimes with the last five years.
What are some reasons a persons certification may be delayed or denied?
Customer complaints
Arbitrations and other civil proceedings
Felony conviction for any nonviolent crimes more than five years ago
Misdemeanors
Employer reviews and terminations
What are the steps in the process to review transgressions that fall under the “presumption” list?
Sign a petition giving the Board jurisdiction over the matter
Pay a fee
Staff will review
if does not fall within the presumption list, then the person will be so notified
if it does , the staff will request relevant documents from the individual
After the Disciplinary and Ethics Commission (“DEC”) reviews a petition for reconsideration, what are the the possible decisions?
Permit
Deny - but may be allowed to reapply after some time
Appeals are directed to the Appeals Committee of the Board of Directors.
As a CFP, what should he do if a client implies he is unable to confide certain elements of their trade or business?
That them for their time, close up the interview and do not engage them as a client.
What disclosure must a CFP provide to a client asking for comprehensive services?
Terms of their engagement including the scope of the engagement with any limitations.
What is a CFPs obligations to the CFP Board and clients if the CFP’s employer falsely advertises?
Not required to notify the CFP Board
Must correct firm misrepresentations to clients
To whom does the code of standards apply to?
Firms themselves are not required to abide by the Standards, as CFP Board certifies individuals, not firms.
Who is responsible for monitoring if such language is not included in the engagement letter?
The CFP.
What is the brochure rule?
Advisory Services that are provided and the fees pertaining to those services
Types of securities that are included in investments
Education background
Participation/interest in securities transactions
Full disclosure of any conflicts of interest
Must be given information prior or at time contract is signed.
Summary of material changes must be provided at least annually.
Who must the RIA register with?
< $100 million - with the state
> $110 million - with SEC
if between, may choose
What is the definition of an advisor?
Someone who is in the business of providing advice about securities for compensation.
What is on Form ADV - Part 1?
The investment business, ownership, clients, employees, business practices, affiliations and disciplinary events of the adviser or its employees.
Must be filed with 90 days of fiscal year end.
What is on Form ADV - Part 2?
The fees, compensation, education, investment objectives, conflicts of interest and the background of advisory personnel.
Who is Excepted to Register with the SEC?
TABLEs where investment advise is incidental
Banks and holding companies that are not investment companies
Publishers of bona fide newspapers
Limited to securities guaranteed by the US
Others not under the intent of the SEC
Who is Exempted from Registration?
VIPS are SaFE from exemptions:
Venture Capital, Insurance, Private funds under $150 million, home State, Foreign advisors and securities not on a national exchange.
What is a Series 6?
Mutual Funds, UITs, variable life insurance and variable annuities
What is a series 7?
Can sell everything except commodities and futures.
