General Principles Flashcards
Code of Ethics
- Honesty, Integrity, Competence, Diligence
- Act in Client’s Best Interest
- Exercise Due Care
- Avoid/Disclose Material Conflicts of Interest
- Maintain Confidentiality/Privacy
- Reflect Positively on CFP Certification and Profession
Financial Planning
Definition
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
Standards of Conduct:
Duties Owed to Firms and Subordinates
- Use reasonable care when supervising
- Comply with lawful objectives of their firm
- Promptly advise their firm, in writing, of any public discipline imposed by CFP Board
Standards of Conduct:
Duties Owed to CFP Board
- May not engage in adverse conduct
- Must provide written notice within 30 calendar days after engaging in adverse conduct
Fiduciary Standard
3 Parts
- Duty of Loyalty
- Duty of Care
- Duty to Follow Client Instructions
Fiduciary Standard:
Duty of Loyalty
- Place the interest of the client above the interests of the firm
- Avoid conflicts of interest, or fully disclose, obtain the client’s consent, and properly manage the conflict
- Act without regard to the financial or other interests of the CFP, the CFP’s firm, or any individual or entity other than the client
Fiduciary Standard:
Duty of Care
Act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the client’s goals, objectives, etc.
At all times when providing ________ ________ to a client, a CFP must act as a fiduciary.
Financial Advice
Required to be provided to the client in writing
Privacy policy
Conflicts of Interest can be delivered to the client…
In writing or orally
Material changes and disciplinary actions/bankruptcy must be reported to clients within ____ days.
90
Compensation Methods
- Fee-Only
- Fee-Based
- Sales-Related Compensation
Exceptions to the Restrictions on Borrowing/Lending
- Member of the family
- Lender is in the money lending business
Practice Standards:
The Financial Planning Process
“Ukuleles In A Divebar Playing Iron Maiden”
- Understand the client’s personal and financial circumstances
- Identifying and Selecting Goals
- Analyzing the Client’s Current & Alternate Courses of Action
- Develop Recommendations
- Present Recommendations
- Implement Recommendations
- Monitor Progress & Update
The Financial Planning Process:
Step 1: Understanding the Client’s Circumstances
- Obtain quantitative and qualitative information
- Analyze information
- Address incomplete information