Lesson 1 - Fundamentals - Ethics, Law and Code of Ethics

Question 1

What duties are owed to a client at ALL Times?

Answer 1

• 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

Question 2

What Duties are owed when providing Financial ADVICE?

Answer 2

• 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

Question 3

What Duties are owed when providing Financial PLANNING?

Answer 3

• All duties with Financial Advice, PLUS
• Practice and Standards for the Financial Planning Process
• Information to a Client in Writing

Question 4

What Duties are owed to Firms and Subordinates?

Answer 4

• Comply - Comply with Lawful objectives of firm
• Use - Use reasonable care when supervising
• Provide - Provide notice of public discipline

C-U-P

Question 5

What duties are owed to the CFP Board?

Answer 5

• Compliance with CFP Trademark T&C
• Cooperation
• Refrain from adverse conduct
• Reporting
• Provide narrative statement

C-C-R-R-A-P

Question 6

What are the components of the Fiduciary Duty?

Answer 6

• Duty of Care
• Duty of Loyalty
• Duty to Follow Client Instructions

CLF

Question 7

What are the components of “Duty of Loyalty”?

Answer 7

• Client Interests are above all
• Avoid Conflict of interest
• Act without regard to CFP’s or Firm’s interest

Question 8

Name the five Integration Factors that connote Financial Planning

Answer 8

• 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

Question 9

What are the 7 Steps in the Practice Standard for the Financial Planning Process?

Answer 9

1. Understanding the Client’s Circumstances
2. Identifying & Selecting Goals
3. Analyzing Client’s Current & Potential Actions
4. Developing Recommendations
5. Presenting Recommendations
6. Implementing Recommendations
7. Monitoring Progress & Updating

Uber Is A Drunk Person’s IMmediate MOtor veh

Question 10

How should information be shared when providing Financial ADVICE?

Answer 10

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

Question 11

How should information be provided when doing Financial PLANNING?

Answer 11

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

Question 12

What is a Felony?

Answer 12

Offense punishable by sentence of atleast $1,000 or 1 Year

Question 13

What is a Relevant Misdemeanor?

Answer 13

Conduct involving Fraud; Theft; Misrepresentation; Violence; Second or more alcohol/drug offense

Question 14

What is a Regulatory Investigation?

Answer 14

Investigation initiated by Federal, State, Local, or Foreign Agency, Self-regulatory, org or other regulatory authority.

Question 15

What is a Regulatory Action?

Answer 15

Action initiated by Federal, State, Local, or Foreign Agency, Self-regulatory, org or other regulatory authority.

Question 16

What is a Civil Action?

Answer 16

Lawsuit or Arbitration

Question 17

What is a Finding?

Answer 17

Adverse final action and a consent decree in which finding is neither admitted or denied.

Question 18

What is a Minor Rule Violation?

Answer 18

Violation of a self-regulatory org where fine is less than $2,500 and is uncontested.

Question 19

What forms can disciple by the CFB Board take?

Answer 19

1. Private Censure - private letter
2. Public Censure - publishable notice
3. Suspension - 90days - 5 years
4. Revocation - of CFP Marks

Question 20

What are the three categories of Candidate Fitness Standards of Conduct identified by the CFP Board?

Answer 20

1. ALWAYS - Conduct that is always unacceptable
2. PRESUMED - Conduct presumed unacceptable
3. OTHER - Other adverse conduct

Question 21

What conduct is ALWAYS deemed Unacceptable?

Answer 21

• 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

Question 22

What conduct is PRESUMED Unacceptable?

Answer 22

• 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)

Question 23

What are OTHER Adverse conduct which concern the CFP Board?

Answer 23

• Misdemeanor convictions
• Arbitrations and other civil proceedings
• Customer complaints
• Employer investigations and terminations
• Felony convictions for nonviolent crimes 5+