High 5 CFP Board’s Standards of Professional Conduct Flashcards
denotes a person who has applied to CFP Board to take the CFP® Certification
Examination, but who has not yet met all of CFP Board’s certification requirements
“Candidate for CFP® certification”
denotes individuals who are currently certified by CFP Board
Certificant
denotes any person or entity that employs a certificant or registrant to provide services to a
third party on behalf of the employer, including certificants and registrants who are retained as independent contractors or
agents.
Certificant employer
denotes a person, persons, or entity who engages a certificant and for whom professional services are
rendered
client
denotes the compensation generated from a transaction involving a product or service and received by an agent or broker, usually calculated as a percentage on the amount of his or her sales or purchase transactions
commission
a ______ includes includes 12(b)1 fees, trailing commissions, surrender charges and contingent deferred sales charges.
commission
any non-trivial economic benefit, whether monetary or non-monetary, that a certificant or related
party receives or is entitled to receive for providing professional activities
compensation
exists when a certificant’s financial, business, property and/or personal interests, relationships or
circumstances reasonably may impair his/her ability to offer objective advice, recommendations or services
conflict of interest
” A certificant may describe his or her practice as “fee-only” if, and only if, all of the certificant’s compensation
from all of his or her client work comes exclusively from the clients in the form of _____ , _________, ______ or _______ fees
fixed, flat, hourly, percentage or
performance-based
One who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of
the client
fiduciary
exists when a certificant performs any type of mutually agreed upon financial planning service for a client
financial planning engagement
a person who provides financial planning services to clients
financial planning practicioner
denotes the process of determining whether and how an individual
can meet life goals through the proper management of financial resources
personal financial planning or financial planning
In determining whether the certificant is providing financial planning or material elements of financial planning, factors that may be considered include, but are not limited to
- _____
- ________
- ____
- __________
The client’s understanding and intent in engaging the certificant.
The degree to which multiple financial planning subject areas are involved.
The comprehensiveness of data gathering
The breadth and depth of recommendations
true or false?
it is necessary to provide a written financial plan to engage in financial planning
false
6 steps to the financial planning process
Establishing and defining the client-planner relationship,
Gathering client data including goals,
Analyzing and evaluating the client’s current financial status,
Developing and presenting recommendations and/or alternatives,
Implementing the recommendations
Monitoring the recommendations
denotes an individual who is not currently certified but has been certified by CFP Board in the past and has an entitlement, direct or indirect, to use the CFP® marks
“Professional Eligible for Reinstatement” (PER)
7 principles of Code of Ethics
integrity objectivity competence fairness confidentiality professionalism diligence
demands honesty and candor which must not be subordinated to personal gain and advantage.
Certificants are placed in positions of trust by clients, and the ultimate source of that trust is the
certificant’s personal ________
integrity
requires intellectual honesty and impartiality
objectivty
Regardless of the particular service rendered or
the capacity in which a certificant functions, certificants should protect the integrity of their work, maintain
______ and avoid subordination of their judgment
objectivty
Maintain the knowledge and skill necessary to provide professional services competently
competence
_____means attaining and maintaining an adequate level of knowledge and skill, and application of that knowledge and skill in providing services to clients. ______ also includes the wisdom to recognize the limitations of that knowledge and when consultation with other professionals is appropriate or referral to other professionals necessary
competence
Be fair and reasonable in all professional relationships. Disclose conflicts of interest
fairness
_____ requires impartiality, intellectual honesty and disclosure of material conflicts of interest. It
involves a subordination of one’s own feelings, prejudices and desires so as to achieve a proper balance of conflicting interests
fairness
______ means ensuring that information is accessible only to those authorized to have access. A
relationship of trust and confidence with the client can only be built upon the understanding that the
client’s information will remain ______
confidentiality ; confidential
______ requires behaving with dignity and courtesy to clients, fellow professionals, and others in
business-related activities. Certificants cooperate with fellow certificants to enhance and maintain the
profession’s public image and improve the quality of services
professionalism
______ is the provision of services in a reasonably prompt and thorough manner, including the proper
planning for, and supervision of, the rendering of professional services
diligence
acronym to remember the 7 principles
FDIC COP
true or false?
a certificant shall disclose to a prospective client or client an accurate and understandable description of the compensation arrangements being offered
true
A certificant shall not borrow money from a client. Exceptions to this Rule include:
a. ________
b. ________
The client is a member of the certificant’s immediate family
The client is an institution in the business of lending money and the borrowing is unrelated to the professional services performed by the certificant
A certificant shall notify CFP Board of changes to contact information, including, but not
limited to, e-mail address, telephone number(s) and physical address, within ___ days
45
A certificant shall notify CFP Board in writing of any conviction of a crime, except
misdemeanor traffic offenses or traffic ordinance violations unless such offense involves the use
of alcohol or drugs, or of any professional suspension or bar within ___ calendar days after the
date on which the certificant is notified of the conviction, suspension or bar
30
Practice standard series 100 involves what step of the financial planning process?
establishing a defining the client-planner relationship
Practice standard series 200 involves what step of the financial planning process?
gathering relevant client info and data
Practice standard series 300 involves what step of the financial planning process?
analyzing and evaluating data
Practice standard series 400 involves what step of the financial planning process?
developing recommendations and communicating them to client
Practice standard series 500 involves what step of the financial planning process?
implementing recommendations
Practice standard series 600 involves what step of the financial planning process?
monitoring
Practice standard 100-1 is _____
Defining the scope of the engagement
Practice standard 200-1 is _____
Determining a Client’s Personal
and Financial Goals, Needs, and
Priorities
Practice standard 200-2 is _____
Obtaining Quantitative Information and Documents
Practice standard 300-1 is _____
analyzing and evaluating client info
practice standard 400-1 is ____
Identifying and Evaluating Financial Planning Alternative(s
practice standard 400-2 is ____
developing the financial planning recommendations
practice standard 400-3 is _______
presenting the financial planning recommendations
practice standard 500-1 is ______
agreeing on implementation responsibilities
practice standard 500-2 is ______
selecting products and services for implementation
practice standard 600-1 is ________
defining monitoring responsibilities
identifying the client is part of domain ____ or also known as ________
1 ; establishing and defining the client-planner relationship
discussing the financial planning needs and expectations is part of domain ___
1
explaining the scope of services is part of domain ___
1
assessing and communicating the CFP’s ability to meet the clients needs and expectations is part of domain ___
1
Identify and resolve apparent and potential conflicts of interest in client relationships is part of domain ___
1
____ to providing any financial planning service, the financial planning practitioner and the client
shall ___ define the scope of the engagement
prior ; mutually
what are the 3 compensation arrangements allowed for a CFP to use?
fee only
commission only
fee plus commission
Activities that CFP Board would not likely consider to be material elements of financial planning include 1. \_\_\_\_\_\_\_\_\_\_ 2. \_\_\_\_\_\_\_\_ 3. \_\_\_\_\_\_\_\_\_ 4. \_\_\_\_\_\_\_\_ 5. \_\_\_\_\_\_\_ 6. \_\_\_\_\_\_\_\_\_ 7. \_\_\_\_\_\_
opening an account or completing an application
fact finding
solely providing brokerage and or insurance services
engaging in activity solely related to the sale of a specific product
acting as a mortgage broker only
completing tax returns only
teaching a financial class
(CATFOES)
Identify the client’s values and attitudes is part of domain ___ or _______
2 ; gathering info necessary to fulfill the engagement
Explore the client’s time horizon for each goal is part of domain ____
2
Assess the client’s level of knowledge and experience with financial matters is part of domain ____
2
. Assess the client’s risk exposures is part of domain ______
2
Assess the client’s risk tolerances is part of domain ___
2
Domain 2 also known as Gathering Info Necessary to fulfill the engagement involves what 3 main topics?
- identify the client’s values and attitudes
- gather data
- recognize need for additional info
The role of the practitioner is to ____ the goal-setting process in order to clarify, with the client, goals and objectives. This falls under domain ___ and practice standard ____
facilitate ; 2 ; 200-1
true or false?
When appropriate, the practitioner shall try
to assist clients in recognizing the implications of unrealistic goals and objectives
true
states the financial planning practitioner shall obtain sufficient quantitative information and documents
about a client relevant to the scope of the engagement before any recommendation is made
and/or implemented.
practice standard 200-2 (Obtaining Quantitative Info and Documents)
If the practitioner is unable to obtain sufficient and relevant quantitative information and
documents to form a basis for recommendations, the practitioner shall either:
- _________
- ______
- Restrict the scope of the engagement to those matters for which sufficient and relevant
information is available - Terminate the engagement.
_____ states that you should evaluate and document the strengths and vulnerabilities of the client’s current financial situation
domain 3 (analyzing and evaluating the client’s current financial status)
conducting scenario analysis or sensitivity analysis should be done under domain ____ also known as ____
4 ; developing recommendations
practice standard ____states that the financial planning practitioner shall consider sufficient and relevant alternatives to the
client’s current course of action in an effort to reasonably meet the client’s goals, needs and
priorities
400-1 IDENTIFYING AND EVALUATING FINANCIAL PLANNING ALTERNATIVE(S)
practice standard ___ states a financial planning practitioner shall analyze the information to gain an understanding of the
client’s financial situation and then evaluate to what extent the client’s goals, needs and
priorities can be met by the client’s resources and current course of action.
300-1 ANALYZING AND EVALUATING THE CLIENT’S INFORMATION
practice standard _____the financial planning practitioner shall develop the recommendation(s) based on the selected
alternative(s) and the current course of action in an effort to reasonably meet the client’s goals,
needs and priorities.
400-2 Develop the Financial Planning Recommendations
domain 5 is ______
communicating the recommendations
presenting the financial plan and providing proper education documents to the client should be done in domain ____
5
Obtain feedback from the client and revise the recommendations as appropriate is part of domain ____
5
Verify client acceptance of recommendations is part of domain ____
5
practice standard ___ state the financial planning practitioner shall communicate the recommendation(s) in a manner and
to an extent reasonably necessary to assist the client in making an informed decision
400-3
reviewing the clients goals and going over assumptions is part of domain ____
5
practice standard ___ also known as ____ states that the practitioner should indicate that even though the recommendations may meet the client’s
goals, needs and priorities, changes in personal and economic conditions could alter the
intended outcome
400-3 ; presenting the financial planning recommendations
____ variables are changes in personal and economic conditions that could alter the intended outcome
contextual
domain 6 is ____
implementing the recommendaitons
creating a prioritized implementation plan is part of domain ____
6
assigning plan responsibilities is part of domain ___
6
supporting the client directly or indirectly with implementation of recommendations is part of domain ___
6
coordinating and sharing info with authorized people is part of domain ___
6
defining monitoring responsibilities is part of domain ___
6
practice standard 500-1 is ____
agreeing on implementation responsibilies
practice standard ______ states the financial planning practitioner and the client shall mutually agree on the implementation responsibilities consistent with the scope of the engagement
500-1
The _____ is responsible for accepting or rejecting recommendations and for retaining and/or
delegating implementation responsibilities
client
practice standard 500-2 is ____
selecting products and services for implementation
practice standard ____ states the financial planning practitioner shall select appropriate products and services that are consistent with the client’s goals, needs and priorities.
500-2
domain 7 is ____
monitoring the recomendations
Discuss and evaluate changes in the client’s personal circumstances is part of domain ____
7
Review the performance and progress of the plan with the client is part of domain ____
7
Review and evaluate changes in the legal, tax and economic environments is part of domain _______
7
Make recommendations to accommodate changed circumstances is part of domain ___
7
Review scope of work and redefine engagement as appropriate is part of domain ___
7
Provide client ongoing support is part of domain ____
7
practice standard 600-1 is ____
defining monitoring responsibilities
the _____ process may reveal the need to reinitiate steps of the financial planning process. The current scope of the engagement may need to be modified.
monitoring
domain 8 is ______
Practicing with Professional and Regulatory standards
Adhere to CFP Board’s Code of Ethics and Professional Responsibility and Rules of Conduct is part of _____
domain 8
Understand CFP Board’s Disciplinary Rules and Procedures is part of domain ___
8
Work within CFP Board’s Financial Planning Practice Standards is part of domain ____
8
Manage practice risk (e.g., documentation, monitor client noncompliance with recommendation(s) is part of domain ____
8
Maintain awareness of and comply with regulatory and legal guidelines is part of domain ____
8
which practice standard states the following?
Mutually define the scope of the engagement before any financial planning service is provided
practice standard 100
which practice standard states the following?
Analyze the information to gain an understanding of the client’s financial situation and evaluate to what extent the client’s goals, needs and priorities can be met by the client’s resources and current course of action
practice standard 300
which practice standard states the following?
Obtain sufficient quantitative information and documents about a client relevant to the scope of the engagement before any recommendation is made and/or implemented
practice standard 200
which practice standard states the following?
Mutually define the client's personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.
practice standard 200
which practice standard states the following?
Mutually define monitoring
responsibilities.
600
which practice standard states the following?
Mutually agree on the
implementation responsibilities
consistent with the scope of
engagement.
500-1
which practice standard states the following?
Select appropriate products and
services that are consistent with the
client’s goals, needs and priorities.
500-2
which practice standard states the following?
Communicate the recommendations
to the client to assist in making an
informed decision.
400-3
which practice standard states the following?
Consider “sufficient and relevant”
alternatives to the client’s current
course of action to reasonably meet
client’s goals, needs and priorities.
400-1
which practice standard states the following?
Develop recommendations in an
effort to reasonably meet the client’s
goals, needs and priorities.
400-2
_____ is charged with the duty of reviewing and taking appropriate action with respect to alleged violations of the Code of Ethics and Rules of Conduct, alleged noncompliance with the Practice Standards and conduct reviewed pursuant to the Fitness Standards.
CFP Board’s Disciplinary and Ethics Commission (DEC)
an unpublished written reproach mailed by the DEC to a censured Respondent
private censure
_____is a publishable written reproach of the Respondent’s behavior. It shall be standard
procedure to publish the _________ in a press release or in such other form of
publicity selected by the DEC
Public Letter of Admonition
The DEC may order suspension for a specified period of time, not to exceed ____years
5
what are the four forms of discipline under the DEC
private censure
public letter of admonition
suspension
revocation
label the following as a presumptive bar or absolute (always) bar under the candidate fitness standards:
- Felony conviction for theft, embezzlement or other financially-based crimes.
- Felony conviction for tax fraud or other tax-related
crimes - Two or more personal or business bankruptcies
- Revocation or suspension of a non-financial professional (e.g. real estate, attorney) 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 - 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.
- Suspension of a financial professional (e.g. registered securities representative, broker/dealer,
insurance, accountant, investment advisor, financial planner) license, unless the suspension 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 other violent crime within the last five years
- Felony conviction for violent crimes other than murder or rape that occurred more than five
years ago - Felony conviction for non-violent crimes (including perjury) within the last five years.
- absolute bar
- absolute bar
- presumptive bar
- presumptive bar
- absolute bar
- absolute bar
- presumptive bar
- absolute bar
- presumptive bar
- presumptive bar
which practice standard involves the following?
Communicate to the client the personal and
economic assumptions, interdependence of
recommendations, advantages and
disadvantages, risks and/or time sensitivity that
factor into the recommendations
400
which practice standard involves the following?
Determine the strengths and weaknesses of the
client’s financial situation and current course of
action
300
which practice standard involves the following?
Disclose your material conflict(s) of interest
Identify the services you will provide
100
which practice standard involves the following?
Discuss with the client any unrealistic goals and
objectives
200
which practice standard involves the following?
Explore the client’s personal and financial values
and attitudes to better develop and prioritize the
client’s goals and objectives
200
which practice standard involves the following?
Develop clear and measurable objectives
200
which practice standard involves the following?
Check to see if there is more than one path to
success, including continuing the current course
of action
400
which practice standard involves the following?
Modify the scope of the engagement, if
necessary
500
which practice standard involves the following?
Select products that are suitable for the client’s
financial situation and that are consistent with
the client’s goals, needs and priorities
500
which practice standard involves the following?
Consult with the client to determine if the client
agrees with your recommendations
500
which practice standard involves the following?
Evaluate whether you should reinitiate the steps
of the financial planning process
600
which practice standard involves the following?
Disclose your compensation arrangement(s)
100
which practice standard involves the following?
When recommending other professionals,
explain why you believe the person you
recommend may be qualified.
500
true or false?
to have a financial planning engagement, more than one area of financial planning must be taking place
false, a financial planning engagement can be in existence with just one area
the principles of financial planning are ____ in character and provide a source of guidance for certificants and registrants
aspirational
can form ADV be done electronically?
yes
can form ADV be used to satisfy some fee disclosures?
yes
a certificant shall not commingle a client’s property with the property of the certificant or the certificant’s employer, unless the commingling is permitted by ____ or is _____ authorized and defined in a _______ agreement between parties
law ; explicitly ; written
what does EGADIM stand for?
The steps to the financial planning process….
establish and defining client planner relationship
gather data
analyze data
develop and communicate recommendations
implement recommendations
monitor
identifying the client is part of ____
domain 1 (establish and define the client-planner relationship)
providing client disclosures is part of ____
domain 1 (establish and define the client-planner relationship)
explaining the scope of services is part of ____
domain 1 (establish and define the client-planner relationship)
identifying and resolving potential conflicts of interest is part of ____
domain 1 (establish and define the client-planner relationship)
what does I-C-BUD stand for?
the things that are necessary to determine if a financial planning engagement exists….
the clients understanding and intent
the degree to which multiple financial planning subject areas are involved
the comprehensiveness
the breadth and depth of recommendations
considering interrelationships among financial planning recommendations is part of ____
domain 4 (developing recommendations)
