Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CFP Review > (old) Code of Ethics and Standards of Conduct > Flashcards

(old) Code of Ethics and Standards of Conduct Flashcards

You may prefer our related Brainscape-certified flashcards:
CFP® flashcards
1
Q

What is Financial Advice?

A
  • Communication reasonably viewed as a recommendation that the Client take, or refrain from taking. a course of action, like:
    • Develop or Implement a Financial Plan
    • Advising to invest (buy, sell, hold, gift) Financial Assets
    • Manage Financial Assets, IPS, portfolio mgmt
    • select Other Persons to provide financial or professional services to Client, OR
  • Exercise discretionary authority over Client’s financial assets
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is Financial Planning?

A
  • a COLLABORATIVE process that helps MAXIMIZE a Client’s POTENTIAL FOR MEETING LIFE’S GOALS through FINANCIAL ADVICE that integrates relavent elements of the Client’s PERSONAL AND FINANCIAL circumstances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the continuing education requirements?

A
  • 30 hours every two years, including 2 hours of ethics
    • Practice what you know, refer what you don’t know
    • Know your limitations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the appropriate use of the CFP marks?

A
  • CFP®
  • CERTIFIED FINANCIAL PLANNERTM (ALL CAPS)
    • followed by: professional, certificant, practitioner, certification, mark, exam
    • do not use as part of email or website address
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the Standards of Conduct?

A

A. Duties Owed to the Client

B. FP and application of The Practice Standards for the FP process

C. Practice Standards for the FP Process

D. Duties owed to the Firms and Subordinates

E. Duties Owed to the CFP Board

F. Prohibition of Circumvention

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is A1 under Standards of Conduct?

A
  • Fiduciary Duty
    • FD = Duty of Loyalty + Duty of Care + Duty to follow instrucitons
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is Duty of Loyalty?

A
  1. Place client interests above CFP and CFP Firm
  2. Avoid or disclose conflicts of interest, obtain Client’s informed consent, manage conflict, and
  3. Act without regard to the interests of the CFP and CFP firm or anybody other than the Client
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the Duty of Care?

A
  • Prudent Man
  • Act with care, skill, and diligence in light of client’s goals, risk tolerance and objectives and financial and personal circumstances
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What document must always be provided to the Client in writing?

A

Privacy Policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What document can be oral or in writing?

A

Conflicts of interst

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What has to be given in writing vs. orally/in writing for Financial Advice?

A
  • Writing:
    • Privacy Policy
  • Orally or in Writing
    • COI
    • Services Products
    • How you, your firm and related parties aare compensated
    • public discipline and bankruptcy
    • Referral Compensation Arrangements
    • Other material info
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What has to be given in writing vs. orally/in writing for Financial Planning?

A

In one or more written documents:

  • Privacy Policy
  • Services Products
  • How the Client Pays
  • How you, your Firm and related parties are compensated
  • Public Discipline and Bankruptcy
  • Referral Compensation Arrangements
  • TERMS OF ENGAGEMENT
    • Implementing, Monitoring and Updated is required unless explicitly excluded
  • Other Material Info

Orally or in Writing

  • Material Conflicts of Interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What type of compensation is a fee-only advisor NOT allowed to receive?

A
  • 12b-1 fees
  • Transaction fees
  • Revenue sharing
  • Referral Fees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the Practice Standards for the FP Process?

A

Uber Is A Drunk Person’s Immediate Motor vehicle

  1. Understanding the Client’s Personal and Financial Circumstances
  2. Identifying and Selecting Goals
  3. Analyze the client’s current course of action and potential alternative courses of action
  4. Developing and Presenting the FP recommendations
  5. Presenting the FP recommendations
  6. Implementing the FP recs
  7. Monitoring the Plan
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the key words for Fiduciary Duty?

What are the test tips?

A

Duty of Loyalty, Duty of Care, Follow Instructions

  • Tips:
    • Any recommendations regarding financial assets must be made as a fiduciary.
    • Client Needs > Financial Planner Interests
    • All compensation and business models
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are the key words for Integrity?

What are the test tips?

A

Honesty, Upstanding, Candor

Test Tips:

  • Allows for innocent mistakes and differences of opinion
  • Do not commit fraud, deceive or violate the spirit of the rules
17
Q

What are the key words for Competence?

What are the test tips?

A

Relevantly Apply Knowledge

  • Test Tips
    • A CFP® Professional does not have to master all areas of planning.
    • Gain competence, obtain assistance, limit the engagement or refer if competence is lacking
18
Q

What are the key words for Diligence?

What are the test tips?

A

Active Consent, Disclosure, Manage, Material Conflict, Ambiguity

Test Tips

  • Consent does not need to be in writing
  • Larger potential for harm, greater the need for disclosure
  • Ambiguity on the side of the client
  • Assume financial conflicts are material
19
Q

What are the key words for Sound and Objective Professional Judgment?

What are the test tips?

A

Exercise judgment, not subordinated

Test Tips

  • Do not accept or solicit gifts that could influence judgment
  • Fruit Basket Yes; Ferrari No
20
Q

What are the key words for Professionalism?

What are the test tips?

A

Dignity, Courtesy and Respect

Test tips:

  • Applies to Clients, Potential Clients and other Financial Pro-fessionals
21
Q

What are the key words for Comply with the Law?

What are the test tips?

A

Laws, Rules, Regulations, Standards

Test Tips:

  • Avoid intentionally or recklessly violating laws, rules, regulations or standards
  • Recklessly can apply to making poor referrals
22
Q

What are the key words for Confidentiality and Privacy?

What are the test tips?

A

Consent, Ordinary Business, Legal and Enforcement Purposes, Policies

Test Tips

  • Client consent does not need to be in writing
  • No absolute confidentiality
  • “Ordinary Business” requires consent
  • “Legal and Enforcement Purposes” does not require consent
  • Must have policies and process to protect Confidentiality, deliver in writing at or before engagement and every 12 months if they change
  • Carve out on policy delivery for Regulation S-P; B/D, Fed-eral Covered RIAs
23
Q

What are the key words for Provide Information to a Client?

What are the test tips?

A

Financial Advice, Financial Planning

Test Tips:

  • Financial Advice requires seven elements (Description, Pay, Compensation, Bankruptcies/Regulatory Events, Conflicts of Interest, Economic Benefit ofReferrals, Other Material Information)
  • Financial Planning all of the above and Scope ofEngage-ment, Limitations and Responsibilities.
  • Monitoring is assumed unless excluded from the scope of engagement.
24
Q

What are the key words for Communicating with a Client?

What are the test tips?

A

Reasonable, Expected to Understand, Avoid Complexity

Test Tips:

  • Ensure Client Understanding
  • Consider multiple forms of communication
25
Q

What are the key words Duties when Representing Compensation?

What are the test tips?

A

Fee-Only, Fee-Based, Sales Related Compensation, Soft Dollars, Non-Monetary Benefits, Related Party

Test Tips

  • Fee-Only generally means direct fees charged to clients or as a percentage of financial assets
  • $.01 ofSales Related Compensation eliminates the ability to use “Fee-Only”
  • 12b-1 Fees are specifically stated as Sales Related Compensation
  • Control and compensation from a related party earning Sales Related Compensation eliminates the ability to use “Fee-Only” with a few carve outs.
  • “Fee Based” = Fees & Sales Related Compensation
  • Soft Dollars (research or speaking services supplied by an investment company or B/D) are not sales related compensation
26
Q

What are the key words Recommending, Engaging or Working with Additional Persons?

What are the test tips?

A

Reasonable Basis, Reputation, Experience, Qualifications, Disclosure, Reasonable Care

Test Tips:

  • This standard requires referring on the basis of reputation, experience and qualifications.
  • Provide disclosure ifpaid a referral fee or given a substan-tial economic benefit.
  • Fruit Basket = No. $1,000 Check = Yes
27
Q

What are the key words for Selecting and using Technology?

What are the test tips?

A

Reasonable Care and Judgment, Level of Understanding

Test Tips:

  • Understand calculations and assumptions
  • Understand Monte Carlo simulation
  • Be able to change assumptions
28
Q

What are the key words for Refrain from Borrowing or Lending Money and Commingling?

What are the test tips?

A

Commingle, Client Assets, Borrow, Lend

Test Tips:

  • Client lending/borrowing generally prohibited
  • Exception family members, businesses who lend/borrow
  • CFP® Professional or their employer cannot commingle with client assets

CFP Review (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions