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HS300 (Mark) > Lesson 10 > Flashcards

Lesson 10 Flashcards

1
Q

Quiz

Which of the following words is NOT found in the CFP Board’s Code of Ethics and Standards of Conduct?

Question 1 options:

A) Integrity

B) Fairness

C) Honesty

A

B) Fairness

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2
Q

Quiz

Which of the following activities is most likely to be considered financial planning by the CFP Board?
Question 2 options:

A) Acting as an order-taker for brokerage services

B) Analyzing a client’s retirement data and making recommendations

C) Completing tax returns without providing any other financial services

D) Completing paperwork to open a brokerage account

A

B) Analyzing a client’s retirement data and making recommendations

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3
Q

Quiz

When providing financial advice to a client, CFP® professionals must disclose all of the following information EXCEPT:

A). a general summary of likely conflicts of interest.

B) a list of the certificant’s current clients.

C) a description of the services and products to be provided.

D) an understandable description of the compensation arrangements.

A

B) a list of the certificant’s current clients.

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4
Q

Quiz

You are a CFP® professional who has been approached by the general partner of Soda King Industries (SKI) to provide financial planning services to the top executives at SKI. Your sister has a 10 percent limited partnership interest in SKI. Can you accept this engagement?

A) No, because your integrity is impaired.

B) No, because your objectivity is impaired.

C) Yes, but only after proper disclosure.

D) Yes, because your integrity and objectivity are not impaired; no disclosure is needed.

A

C) Yes, but only after proper disclosure.

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5
Q

Quiz

Which of the following is (are) true regarding suspension?

I. The Disciplinary and Ethics Commission may order a suspension of a CFP® professional for up to 10 years.
II. It is standard procedure to publish notice of suspensions with identification of the suspended certificant in press releases or other forms of publicity.

Question 5 options:

A) I only

B) II only

C) Both I and II

D) Neither I nor II

A

B) II only

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6
Q

Quiz

Which of the following is (are) forms of discipline used by the CFP Board?

I. Private censure
II. First-strike penalties
III. Suspension
IV. Monetary penalties

A) I and II

B) I and III

C) II, III, and IV

D) I, II, III, and IV

A

B) I and III

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7
Q

Quiz

All of the following statements are true EXCEPT:

A) A fiduciary’s duty of care involves acting in the best interest of the organization.

B) When providing financial advice to a client, the CFP® professional has a fiduciary’s duty of care.

C) A certificant who is an employee/agent shall notify his or her current employer if his or her certification is revoked or suspended by the CFP Board.

D) A CFP® professional must avoid or disclose and manage conflicts of interest.

A

A) A fiduciary’s duty of care involves acting in the best interest of the organization.

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8
Q

Quiz

Under the candidate-fitness standards, the following conduct is unacceptable and will always bar an individual from becoming certified

A) A felony conviction for violent crimes (other than murder or rape) that occurred more than 5 years ago

B) A suspension of a financial professional license

C) A felony conviction for tax fraud

D) All of the above

A

C) A felony conviction for tax fraud

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9
Q

Quiz

If a CFP® professional engaging in financial planning represents his compensation method as fee-only, then which of the following is an acceptable form of compensation for him?

A) Fees collected on the management of a client’s investment assets

B) A commission earned on the sale of a variable annuity

C) A commission earned on the sale of a term life policy

D) A commission earned on the sale of a whole life policy

A

A) Fees collected on the management of a client’s investment assets

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10
Q

Quiz

Which of the following duties to the client under Section A of the CFP Board’s Code of Ethics and Standards of Conduct ensures that information is accessible only to those authorized to have access?

A) Professionalism

B) Competence

C) Confidentiality

D) Integrity

A

C) Confidentiality

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11
Q

Knowledge Check

The CFP Board’s Practice Standards are intended to?

A. Assure that the practice of financial planning by CFP® professionals are based on established norms of practice

B. Enhance the value of the financial planning process

C. Advance professionalism in financial planning

D. All of the above

A

D. All of the above

All of the statements regarding the Practice Standards are correct.

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12
Q

Knowledge Check

The Code and Standards establish a fiduciary duty for CFP® professionals. When does the fiduciary duty apply?

A. At all times when providing financial advice.

B. When providing financial planning, but not when providing financial advice that does not require financial planning.

C. When providing marketing materials to a prospective client.

D. When providing financial education material to the general public.

A

A. At all times when providing financial advice.

The cornerstone of the Code and Standards is the fiduciary duty, which applies at all times when providing financial advice. When the CFP® professional is not providing financial advice, the fiduciary duty does not apply; however, the CFP® professional must continue to abide by the Code of Ethics and Standards of Conduct. Examples of situations where the CFP® professional is not providing financial advice include 1) communications that, based on content and context, would not be viewed as a recommendation, 2) responses to direct orders, and 3) marketing or general education materials that a reasonable CFP® professional would not view as financial advice.

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13
Q

Knowledge Check

All of the following are “financial advice” as defined in the Code and Standards EXCEPT

A. A recommendation that a client refrain from investing in a particular financial asset

B. A recommendation regarding portfolio composition

C. A recommendation regarding the selection of other persons to provide professional services to the client

D. Executing stock trades under the direct order of the client

A

D. Executing stock trades under the direct order of the client

Financial advice also includes the development or implementation of a financial plan and the exercise of discretionary authority over the client’s financial assets.

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14
Q

Knowledge Check

Which of the following is (are) true with respect to the Practice Standards?

I. Includes monitoring responsibilities after a financial plan is implemented.
II. The scope of the engagement does not have to be in writing when providing financial advice that does not require financial planning.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

A

C. Both I and II

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15
Q

Knowledge Check

Which of the following is true with respect to forms of discipline?

I. All revocations issued by the Commission are permanent.
II. The Commission may order suspension for an unspecified period of time.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

A

A. I only

Statement I is correct.
Revocation is permanent, and suspensions must be specified for five years or less.

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16
Q

Knowledge Check

While permanent revocation may be used for egregious violations of the CFP® practice standards, minor violations are more likely to be met with which of the following forms of discipline?

A. A public letter of admonition

B. A suspension from using the CFP® marks

C. A monetary fine

D. Up to 50 hours of community service

A

A. A public letter of admonition

The forms of discipline available to the CFP board are private censure, public letter of admonition, suspension, and revocation.
Statement (B) is incorrect because suspensions, like revocations, are only for major violations.

17
Q

A felony conviction for any of the following would always bar an individual from CFP certification EXCEPT:

A. Embezzlement

B. Tax fraud

C. Murder

D. Perjury

A

D. Perjury

Perjury is on the presumptive bar list, meaning it is possible for an individual with a felony conviction for perjury to attain CFP certification after a succession petition to the CFP Board. The other answers will always bar an individual from CFP certification.

18
Q

According to the CFP® candidate fitness standards, all the following statements are true of a candidate’s bankruptcy EXCEPT:

A. A second bankruptcy will deny a candidate the right to use the CFP® marks.

B. When providing financial planning, bankruptcies occurring in the past 5 years must be disclosed to clients in writing.

C. If a candidate files a successful petition following bankruptcy, they may use the CFP® marks.

D. Bankruptcies will not affect a candidate’s ability to use the CFP® marks, but they will be disclosed on the CFP board’s website for 10 years.

A

D. Bankruptcies will not affect a candidate’s ability to use the CFP® marks, but they will be disclosed on the CFP board’s website for 10 years.

In October 2019, the rules regarding bankruptcy changed to reflect statements (A), (B), and (C).
Before October 2019, statement (D) was correct.

19
Q

Quiz

Section A of the Standards of Conduct is organized into 12 different subsections outlining principles of ethics and professional ideals that CFP® professionals are expected to enact into their professional activities.

A. True

B. False

A

B. False

20
Q

Quiz

Standard A.1 of the Standards of Conduct provides that a CFP® professional has the duty of care of a fiduciary to the client when providing financial advice.

A. True

B. False

A

A. True

21
Q

Quiz

The duty of care of a fiduciary involves acting in a manner that is in the best interest of the client.

A. True

B. False

A

A. True

22
Q

Quiz

The Practice standards are designed to be a basis for legal liability to any third party and establishes the level of professional practices expected of CFP

A. True

B. False

A

B. False

23
Q

Quiz

In accordance with Practice Standard C.4, the financial planner sand client mutual define the scope of engagement.

A. True

B. False

A

B. False

24
Q

Quiz

Facilitating the goal-setting process and clarifying the client’s goals and objectives is part of the Practice Standards.

A. True

B. False

A

A. True

25
Q

Quiz

When the Commission finds grounds for discipline of a CRP professional, the forms of discipline available include private censure, public censure, suspension. revocation, and interim suspension.

A. True

B. False

A

A. True

26
Q

Quiz

The CFP Board publishes a review of misconduct cased processed by CFP Board and the Commission.

A. True

B. False

A

A. True

27
Q

End of Chapter Questions

CFP Board is a certification and standard-setting organization that:

A. Establishes and enforces education requirements for CFP® professionals.

B. Establishes and enforces examination requirements for CFP® professionals.

C. Establishes and enforces ethics requirements for CFP® professionals.

D. All of the above.

A

D. All of the above.

CFP Board is a certification and standard-setting organization that: a. Establishes and enforces education requirements for CFP® professionals. b. Establishes and enforces examination requirements for CFP® professionals. c. Establishes and enforces ethics requirements for CFP® professionals. d. All of the above.

28
Q

End of Chapter Questions

Which of the following is not in the Code of Ethics?

A. Frugality.

B. Integrity.

C. Competence.

D. Avoid or disclose and manage conflicts of interest.

A

A. Frugality.

Frugality is not in the Code of Ethics.

29
Q

End of Chapter Questions

Which of the following are true with respect to the Practice Standards?

  1. Each Practice Standard makes up one of seven steps in the financial planning process.
  2. Includes monitoring responsibilities after a financial plan is implemented.
  3. The scope of the engagement does not have to be in writing when providing financial advice that does not require financial planning.

A. 3 only.

B. 1 and 3.

C. 1, 2, and 3.

D. None of the above.

A

C. 1, 2, and 3.

30
Q

End of Chapter Questions

Dierk is a client and seems to be suffering from dementia and wants to remove his children from his will and give all of his wealth to Bentley, a neighbor who periodically visits Dierk and delivers him groceries. What should the CFP® professional do?

A. He should contact Dierk’s children to let them know.

B. He should do what Dierk asks.

C. He should contact the doctor to confirm if he is suffering from dementia or not.

D. He should contact Dierk’s lawyer

A

D. He should contact Dierk’s lawyer

31
Q

End of Chapter Questions

What is the client’s responsibility during the financial planning process?

A. To interpret all the information that is gathered.
B. To provide the professional with all requested information.
C. To pay their fees.
D. To implement the financial plan.

A

B. To provide the professional with all requested information.

A planner is required to limit the scope of an engagement or disengage a client, if a client does not provide all of the necessary documents and information. This is the primary responsibility of a client during the financial planning process.

A. is incorrect as that describes the planner’s responsibility during the financial planning process.
C. is incorrect because paying fees is not detailed as a requirement of the client during an
engagement. Although there is a moral and legal obligation to pay the fees, it is not a
responsibility during the financial planning process.
D. is incorrect because the client and planner will decide the extent to which the client will assist with
implementation of the plan.

HS300 (Mark) (10 decks)

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