Sec. 1 - Ch.2: Standards & Ethics

Question 1

Duty to Follow Client Instructions

Answer 1

Required to comply with the client’s instructions, objectives, policies, and restrictions presuming they are reasonable and lawful

Question 2

The Competence Standard

Answer 2

The CFP must make clear to the client any requested professional services that the CFP and or the firm will not be providing

Question 3

Is consent from the client required to be in written form?

Answer 3

No

Question 4

Under the Provide information to the Client standard, what must the CFP provide to the client?

Answer 4

• A description of the services and products that the financial planner/firm will provide
• A clear explanation of how the client will pay for the products/services

Question 5

How long does the CFP have to disclose material changes, like disciplinary actions and bankruptcy, to a client?

Answer 5

90 days

Question 6

What are examples of sales-related compensation?

Answer 6

• Commissions
• 12 b-1 fees
• Trailing Compensations
• Bid/ask spreads
• Transaction fees
• Revenue Sharing
• Solicitor fees

Question 7

What is the “Safe Harbour” for related parties?

Answer 7

When the CFP’s firm implements procedures to prevent the CFP from recommending that any client obtain financial assets through a related party. This way they won’t need to disclose sales-related compensation to related parties (cause there shouldn’t be any related parties)

Question 8

When are you allowed to borrow or lend with a client?

Answer 8

ID they are a member of the CFPs family or the lender’s normal business entails the business of lending money

Question 9

Financial Planning Definition?

Answer 9

A collaborative process intended to maximize a client’s potential for meeting life goals applying financial advice that considers numerous and relative aspects of the client’s financial and personal life

Question 10

What are the forms of public discipline by the CFP board?

Answer 10

Letters of admonition, suspension (up to 5 years), and revocation of the CFP marks

Question 11

Can a CFP appeal a ruling from the DCA?

Answer 11

Yes, but they need to file within 30 days of the notice and it needs to be by mail.
- Most people will do a Petition of Appeal via Certified Mail

Question 12

What is the DCA

Answer 12

The Disciplinary and Ethics Commission