Mod 6: Professional Conduct and Fiduciary Responsibility

Question 1

6 Principles of the CFP Board’s Code of Ethics

Answer 1

1) Act with Honesty, Integrity, Competence, and Diligence
2) Act in the Client’s Best Interests
3) Exercise Due Care
4) Avoid or Disclose and Manage Conflicts of Interest
5) Maintain the Confidentiality and Protect the Privacy of Client Information
6) Act in a Manner that Reflects Positively on the Financial Planning Profession and CFP Certification

Question 2

6 Components of the Standards of Conduct

Answer 2

1) Duties owed to clients
2) Financial Planning and application of the practice standards for the financial planning process
3) Practice Standards for the financial planning process
4) Duties owed to firms and subordinates
5) Duties owed to CFP Board
6) Prohibition of Circumvention

Question 3

Standards of Conduct

What are the 3 components of the Fiduciary Duty?

Answer 3

1) Duty of Loyalty
2) Duty of Care
3) Duty to Follow Instructions

Question 4

Standards of Conduct

What are the 15 Duties Owed to Clients?

Answer 4

1) Fiduciary Duty
2) Integrity
3) Competence
4) Diligence
5) Disclose and Manage Conflicts
6) Sound and Objective Professional Judgement
7) Professionalism
8) Comply with the Law
9) Confidentiality and Privacy
10) Provide Information to a Client
11) Duties when Communicating with a Client
12) Duties when Representing Compensation Method
13) Duties when Recommending, Engaging, and Working with Additional Persons
14) Duties when Selecting, Using, and Recommending Technology
15) Refrain from Borrowing or Lending Money and Commingling Financial Assets

Question 5

3 Duties owed to Firms and Subordinates

Answer 5

1) Use reasonable care when supervising
2) Comply with lawful objectives of CFP Professional’s Firm
3) Provide notice of public discipline

Question 6

Duties Owed to CFP Board

When must you report incidents involving adverse conduct to the CFP Board?

Answer 6

Within 30 days