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CFP > Professional Conduct and Regulation > Flashcards

Professional Conduct and Regulation Flashcards

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CFP® flashcards
1
Q

Code of ethics: Act with

A

Honesty, integrity, competence, and diligence.

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2
Q

Code of ethics: Act in the

A

Client’s best interest

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3
Q

Code of ethics: Excercise

A

Due care

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4
Q

Code of ethics: Avoid

A

Or disclose and manage conflicts of interest.

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5
Q

Code of ethics: Maintain

A

The confidentiality and protect the privacy of client information.

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6
Q

Code of ethics: Act in a

A

Manner that reflects positively on the financial planning profession and the CFP certification.

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7
Q

Fiduciary duty

A

At all time a CFP professional must act in the client’s best interest. This includes a duty of loyalty, duty of care, and duty to follow client instructions.

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8
Q

If a CFP lacks competence, he may

A

1) gain competence
2) obtain the assistance of a competent professional
3) limit or terminate the engagement
4) refer the client to a competent professional

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9
Q

A CFP professional must report a reportable offense to the CFP Board in writing within __ calendar days?

A

30

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10
Q

If a consumer is denied credit, they must be informed which credit reporting agency provided information to the creditor

A

Fair Credit Reporting Act of 1971

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11
Q

Negative information may be retained on a credit report for 7 years and bankruptcy for 10 years

A

Fair Credit Reporting Act of 1971

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12
Q

Consumer may include a written version of facts in their file if they disagree with the credit reporting agency.

A

Fair Credit Reporting Act of 1971

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13
Q

Right to challenge credit card charges

A

Fair Credit Reporting Act of 1971

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14
Q

Lenders must make uniform disclosures

A

Truth in Lending Act of 1968 and 1996

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15
Q

Provides a standard method of calculating and reporting interest (APR).

A

Truth in Lending Act of 1968 and 1996

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16
Q

Lenders must disclose payment terms

A

Truth in Lending Act of 1968 and 1996

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17
Q

Regulation Z Required disclosures - the law

A

Truth in Lending Act of 1968 and 1996

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18
Q

Enables borrowers to recover from creditors who break the rules regarding the correction of billing errors

A

Fair Credit Billing Act

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19
Q

Allows a borrower to recover if a creditor discriminates against her for any reason that is prohibited by the Act

A

Equal Credit Opportunity Act

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20
Q

Provides for recovery by those who suffer losses due to a financial institution failing to follow the provisions of the act.

A

Electronic Fund Transfer Act

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21
Q

Requires the registration of IPOs

A

Securities Act of 1933

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22
Q

Requires companies with previously issued securities to keep information current.

A

Securities Exchange Act of 1934

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23
Q

Created the SEC

A

Securities Exchange Act of 1934

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24
Q

Requires brokers and dealers to register with the SEC

A

Securities Exchange Act of 1934

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25
Q

Extended securities laws to investment companies (mutual funds)

A

Investment Company Act of 1940

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26
Q

Requires registration for and regulates the activities of investment advisers

A

Investment Adviser Act of 1940

27
Q

Insures customers’ accounts up to $500,000 in securities and cash with a limit of $250,000 of cash coverage

A

Security Investors Protection Act of 1970

28
Q

Toughens the accountability for accuracy of financial information released by corporations

A

Sarbanes-Oxley Act of 2002

29
Q

Requires independence on corporate boards

A

Sarbanes-Oxley Act of 2002

30
Q

Set stricter rules for auditors

A

Sarbanes-Oxley Act of 2002

31
Q

Created the Consumer Financial Protection Bureau and the Financial Stability Oversight Council

A

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

32
Q

Wrote into law the fiduciary duty owed by investment advisers to their clients

A

The Investment Advisers Act of 1940

33
Q

Sets minimum standards for pension and health plans in private industry and provides protection for individuals participating in those plans

A

Employee Retirement Income Security Act of 1975

34
Q

Directed the SEC to supervise the development of a national securities market and a system for nationwide clearing and settlement of securities transactions

A

Securities Acts Amendments of 1975

35
Q

Exempted derivatives from regulation

A

Commodity Fututres Modernization Act of 2000

36
Q

Requires broker-dealers to have internal policies, procedures, and controls to meet the “know your customer” mandate

A

The USA PATRIOT Act of 2001

37
Q

Requires hedge fund managers with assets under management of $100 million or more to register with the SEC

A

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

38
Q

What is step 1 of the financial planning process?

A

Understanding the client’s personal and financial circumstances

39
Q

What is step 2 of the financial planning process?

A

Identifying and selecting goals?

40
Q

What is step 3 of the financial planning process?

A

Analyzing the client’s current course of action and potential alternative course(s) of action.

41
Q

What is step 4 of the financial planning process?

A

Developing the financial planning recommendation(s)

42
Q

What is step 5 of the financial planning process?

A

Presenting the financial planning recommendation(s)

43
Q

What is step 6 of the financial planning process?

A

Implementing the financial planning recommendations(s)

44
Q

What is step 7 of the financial planning process?

A

Monitoring progress and updating

45
Q

What are the three tests to be classified as an adviser under the Investment Advisers Act of 1940?

A
  1. Advice - must give advice concerning securities
  2. Business - must be engaged in the business of giving advice about securities
  3. Compensation - must receive compensation for such advice
46
Q

This was the original law that required investment advisers to register with the SEC?

A

The Investment Advisers Act of 1940

47
Q

Which law prohibited financial institutions from consolidating and offering any combination of traditional commercial banking, investment banking, and insurance.

A

Glass-Steagall Act of 1933

48
Q

This law extended SEC regulation to the OTC market.

A

Maloney Act of 1938

49
Q

This law spread the regulation and control of insurance to the state level.

A

McCarran-Ferguson Act of 1945

50
Q

What are the purposes of FINRA?

A
  1. Market regulation
  2. Member regulation
  3. Enforcement
  4. Dispute resolution
  5. Advertising regulation/investment companies
51
Q

What is the securities industry self-regulating body?

A

Financial Industry Regulatory Authority (FINRA)

52
Q

Which license allow an adviser to sell mutual funds, variable annuities, variable life insurance, and initially offered Unit Investment Trusts?

A

Series 6

53
Q

What license allow an adviser to sell any securities including individual stocks and ETFs?

A

Series 7

54
Q

What license allows an adviser to act as a registered principal and is required to manage member’s securities or investment banking business?

A

Series 24

55
Q

What license allow an adviser to sell securities within a state?

A

Series 63

56
Q

What license allows an adviser to provide investment advice to clients within the holder’s primary state of residence?

A

Series 65

57
Q

What license combines the Series 63 and 65 licenses?

A

Series 66 - must first pass Series 7

58
Q

Taxes, public spending, and government borrowing are exmaples of what?

A

Fiscal policy

59
Q

Required reserve ratio, open market operations, and the discount rate are examples of what?

A

Monetary policy

60
Q

When taxes go down, public spending goes up, and government borrowing goes up

A

Expansionary policy

61
Q

When taxes up, public spending goes down, and government borrowing goes down

A

Contractionary policy

62
Q

The Truth in Lending Act states that a credit card holder can only be liable for $___ of unauthorized charges if they report the credit card lost or stolen.

A

$50

63
Q

How many continuing education hours are required by CFP every two years?

A

30 hours

CFP (9 decks)

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