Lesson 1 - Fundamentals - Ethics, Law and Code of Ethics Flashcards
What duties are owed to a client at ALL Times?
- Diligence
- Refrain from Borrowing, Lending, Comingling
- Integrity
- Professionalism
- Sound and Objective Professional Judgement
- Competence
- Comply with the Law
- Confidentiality & Privacy
- Duties when Communicating with a Client
- Duties when Representing Compensation
- Duties when Selecting Technology
DRIPS - CCC - DDD
What Duties are owed when providing Financial ADVICE?
- All duties owed at ALL times, PLUS
- Duty as a Fiduciary - Fiduciary Duty
- Disclose and Mange Conflicts of Interest
- Duties when Recommending, Engaging and Working with Additional Persons
What Duties are owed when providing Financial PLANNING?
- All duties with Financial Advice, PLUS
- Practice and Standards for the Financial Planning Process
- Information to a Client in Writing
What Duties are owed to Firms and Subordinates?
- Comply - Comply with Lawful objectives of firm
- Use - Use reasonable care when supervising
- Provide - Provide notice of public discipline
C-U-P
What duties are owed to the CFP Board?
- Compliance with CFP Trademark T&C
- Cooperation
- Refrain from adverse conduct
- Reporting
- Provide narrative statement
C-C-R-R-A-P
What are the components of the Fiduciary Duty?
- Duty of Care
- Duty of Loyalty
- Duty to Follow Client Instructions
CLF
What are the components of “Duty of Loyalty”?
- Client Interests are above all
- Avoid Conflict of interest
- Act without regard to CFP’s or Firm’s interest
Name the five Integration Factors that connote Financial Planning
- Portion of Assets
- Length of Time client’s circumstances effected
- Effect on Risk if client implements
- Number of Elements
- how Tough would be to Modifying actions
What are the 7 Steps in the Practice Standard for the Financial Planning Process?
- Understanding the Client’s Circumstances
- Identifying & Selecting Goals
- Analyzing Client’s Current & Potential Actions
- Developing Recommendations
- Presenting Recommendations
- Implementing Recommendations
- Monitoring Progress & Updating
Uber Is A Drunk Person’s IMmediate MOtor veh
How should information be shared when providing Financial ADVICE?
When providing Financial Advice:
* Privacy Policy in Writing
All other information orally OR in writing:
* Conflicts of Interest
* Services & Products
* How Client pays
* How CFP and related parties are compensated
* Public Discipline & Bankruptcy
* Referral Compensation arrangements
* Other material information
How should information be provided when doing Financial PLANNING?
When providing Financial Planning:
* Privacy Policy in Writing
* Conflicts of Interest
* Services & Products
* How Client pays
* How CFP and related parties are compensated
* Public Discipline & Bankruptcy
* Referral Compensation arrangements
* Terms of Engagement
* Other material information
All other information orally OR in writing:
* Material Conflicts of Interest
What is a Felony?
Offense punishable by sentence of atleast $1,000 or 1 Year
What is a Relevant Misdemeanor?
Conduct involving Fraud; Theft; Misrepresentation; Violence; Second or more alcohol/drug offense
What is a Regulatory Investigation?
Investigation initiated by Federal, State, Local, or Foreign Agency, Self-regulatory, org or other regulatory authority.
What is a Regulatory Action?
Action initiated by Federal, State, Local, or Foreign Agency, Self-regulatory, org or other regulatory authority.
What is a Civil Action?
Lawsuit or Arbitration
What is a Finding?
Adverse final action and a consent decree in which finding is neither admitted or denied.
What is a Minor Rule Violation?
Violation of a self-regulatory org where fine is less than $2,500 and is uncontested.
What forms can disciple by the CFB Board take?
- Private Censure - private letter
- Public Censure - publishable notice
- Suspension - 90days - 5 years
- Revocation - of CFP Marks
What are the three categories of Candidate Fitness Standards of Conduct identified by the CFP Board?
- ALWAYS - Conduct that is always unacceptable
- PRESUMED - Conduct presumed unacceptable
- OTHER - Other adverse conduct
What conduct is ALWAYS deemed Unacceptable?
- Felony for: Theft; embezzlement, financial crimes
- Felony for tax-related fraud/crimes
- Revocation of a financial professional license
- Felony conviction for any degree of murder/rape
- Felony conviction for violent crime in last 5 years
What conduct is PRESUMED Unacceptable?
- 2 or more personal bankruptcies
- Revocation of a NON-FINANCIAL license
- Suspension of a financial professional license
- Felony conviction for NON-violent crimes (5 years)
- Felony conviction for violent crimes (5 plus years)
What are OTHER Adverse conduct which concern the CFP Board?
- Misdemeanor convictions
- Arbitrations and other civil proceedings
- Customer complaints
- Employer investigations and terminations
- Felony convictions for nonviolent crimes 5+
