Standards of Practice

Question 1

Identify the 8 Principles in the Code of Ethics
for CFP professionals

Hint: LIOC-FCDP

Answer 1

8 Principles of the code of ethics

1. Duty of Loyalty
2. Integrity
3. Objectivity
4. Competence
5. Fairness
6. Confidentiality
7. Diligence
8. Professionalism

Question 2

Describe each of the 8 Principles in the Code of Ethics for CFP professionals

Answer 2

1. Duty of Loyalty -client’s best interest…client first, disclose conflicts, act with care, skill, and diligence of a prudent professional.
2. Integrity -act with integrity, honesty and justice, both letter and spirit of the code.
3. Objectivity -when providing advice/services, intellectual honesty, impartial, exercise sound judgement regardless of services or capacity.
4. Competence -develop and maintain abilities, skills, knowledge.
5. Fairness -fair and open in all dealings, provide what they should reasonably expect from a professional relationship. Honesty and disclosure of all facts, including conflicts of interest.
6. Confidentiality -client info secured, protected, and maintained in a manner that allows access to only authorized. Relationship of trust and confidence.
7. Diligence -degree of care and prudence in client affairs. timely and thorough manner and taking due care in guiding, informing, planning, supervising, and delivering financial advice and/or services to clients.
8. Professionalism -conduct to inspire confidence and respect from clients and the community.

Question 3

37 Rules of Conduct

What are the 5 General Rules

Answer 3

1. Not engage in or associate with individuals engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, or knowingly make a false or misleading statement to clients or any other parties.
2. Not engage in any conduct that reflects adversely on his or her integrity or fitness as a Certificant, the certification marks or the profession.
3. Not impugn the reputation of another Certificant to either clients or the public. Any concerns regarding the unprofessional conduct of a Certificant shall be referred to the Standards Council for review in accordance with the provisions of Rule 2 above, unless prevented by law or confidentiality requirements.
4. A Certificant shall promptly inform the Standards Council where they have knowledge that another Certificant has committed an egregious violation of the Code or Rules that raises substantial questions as to the Certificant’s honesty, trustworthiness or fitness as a Certificant. Rule 4 does not require disclosure of information or reporting based on knowledge gained as a consultant or expert witness in anticipation of or related to litigation or other dispute resolution mechanisms.
5. A Certificant who has knowledge that raises a substantial question of illegal conduct related to financial advice and/or services by another Certificant or other financial professional shall promptly inform the appropriate regulatory and/or professional disciplinary body, unless prevented by law or confidentiality requirements. Rule 5 does not require disclosure or reporting of information gained as a consultant or expert witness in anticipation of or related to litigation or other dispute resolution mechanisms.

Question 4

37 Rules of Conduct

Rules 6-10:What are the Discretionary Authority - Professional Obligations to the Client?

Answer 4

1. When a Certificant holds the funds and/or property of a client, they have the following responsibilities:
   a) Takes custody with care required of a fiduciary;
   b) Act only in accordance with the authority set forth in the governing legal instrument
   c) Keep complete records of all funds
   d) Deliver any funds and render a full accounting
   e) Not commingle client funds or other property with a Certificant’s personal funds and/or other property or the funds and/or other property of a Certificant’s firm. Commingling one or more clients’ funds or other property together is permitted
   f) Shall not use, transfer, withdraw or otherwise employ funds or property for their fees, or for any other purpose not provided for in the engagement, except when authorized in writing by the client.
2. Disclose description of the known costs of the services and products, to the client;
   b) how compensated for providing the products and services;
   c) Any contingency or referral fees received
   d) Summary of potential conflicts of interest
   e) The specific financial planning services the Certificant will perform for the client;
   f) Any information materially affect the client relationship/engagement;
   g) Any information that the client might reasonably want to know in establishing the scope and nature of the relationship, including, areas of expertise; and Contact information
   a) Not provide services where there is an existing conflict unless, after full written disclosure and written consent before providing services to the client. client’s decision to proceed. disclosure to the client of any material changes to the above information, in accordance with the provisions of Rule 8.
3. refrain from personally lending money to a client or personally borrowing money from a client.

Question 5

37 Rules of Conduct

Rules 11-13: Client Relations?

Answer 5

1. Comply with the established terms of engagement.
2. Reasonable steps to inform of material changes in circumstances have an impact on the professional relationship or services to be rendered. Such changes may include, but are not limited to:
   * *a) conflicts of interest;
   b) the Certificant’s business affiliation;
   c) compensation structures affecting the professional services to be rendered; and
   d) new or changed agency relationships**
3. Fulfill professional commitments in a timely and thorough manner.

Question 6

37 Rules of Conduct

Rules 14-16: Withdrawal of Services?

Answer 6

1. client receives timely written notice and not prejudice the client.
2. Directly notify the client of the change in a relationship
3. take appropriate steps to ensure the client is notified of the Certificant’s departure from the firm/employer.
4. Ensuring a smooth transition to a new financial planner.

Question 7

37 Rules of Conduct

Rule 18: Professional Oversight and Supervision of Others?

Answer 7

1. A Certificant shall provide reasonable and prudent professional supervision of any subordinate or third party to whom the Certificant assigns any work. A Certificant shall provide reasonable and prudent professional supervision of any individual whose work is subject to review or oversight by the Certificant

Question 8

37 Rules of Conduct

Rule 19-20: Duties to Prospective Clients?

Answer 8

1. A Certificant shall not adopt any method of obtaining or retaining clients that lower the standard of dignity of the profession. For greater certainty:

• ​​A Certificant shall not make a false or misleading communication about the size, scope or areas of competence of their practice or of any organization with which the Certificant is associated;
• A Certificant shall not make false or misleading communications to the public or create unverifiable expectations regarding matters relating to financial planning or competence of the Certificant; and
• A Certificant shall not give the impression that they are representing the views of FP Canada, the FP Canada Standards Council or any other group unless the Certificant has been authorized to do so.

1. A Certificant shall provide prospective clients with:

• A description of the services the Certificant will provide to the client;
• An accurate and understandable description of: (i) any costs payable by the client; (ii) how the client will pay for the services provided; and (iii) how the Certificant and the Certificant’s firm are compensated for providing the services and associated products.; and
• Any information about the Certificant that could reasonably be expected to materially affect the prospective client’s decision to engage the Certificant

Question 9

37 Rules of Conduct

Rule 21-27: Financial Planning Services?

Answer 9

1. A Certificant shall always exercise reasonable and prudent professional judgment.
2. A Certificant shall make only those recommendations that are both prudent and appropriate for the client.
3. A Certificant shall implement only those strategies that are both prudent and appropriate for the client and that the Certificant reasonably believes will not materially and negatively impact the client’s best interests.
4. A Certificant shall provide their professional services in accordance with applicable laws, regulations, rules or established policies of governmental agencies and other applicable authorities, including FP Canada and the FP Canada Standards Council
5. A Certificant shall offer advice only in those areas in which the Certificant is competent. In areas where the Certificant is not sufficiently competent, the Certificant shall seek the counsel of qualified individuals and/or refer clients to such parties.
6. Where a Certificant refers a client to a third party, the Certificant has an obligation to take reasonable steps to ensure the third party to whom the client is referred to has the appropriate qualifications to provide the services for which the referral is made.
7. A Certificant shall refrain from intervening in client matters outside the scope of the engagement

Question 10

37 Rules of Conduct

Rule 28-30: Duty of Confidentiality?

Answer 10

1. A Certificant shall not disclose or use any personal or confidential information pertaining to a prospective client, a client or a former client without the written and informed consent of the client, unless in response to proper legal, statutory or regulatory process under which the Certificant is obliged to do so, including cooperation with the FP Canada Standards Council investigation of a complaint
2. A Certificant shall take prudent steps to protect the security of information and property, whether physically or electronically
3. A Certificant shall not disclose a client’s name to any other party without informed consent of the client, unless in response to proper legal, statutory or regulatory process under which the Certificant is obliged to do so, including cooperation with the FP Canada Standards Council investigation of a complaint

Question 11

37 Rules of Conduct

Rule 31-35: Relationship to FP Canada?

Answer 11

1. a)Making full and accurate Legal Declarations when completing their Annual Renewal Form. involvement in civil proceedings; criminal convictions; court orders; and investigations or decisions by professional bodies and regulatory/licensing bodies;
   b) Advising FP Canada, in writing, of any changes to prior Legal Declarations within 15 days of becoming aware of new information;
   c) Using the Certification Marks in compliance with the rules and regulations of FP Canada, as established and amended from time to time;
   d) Complying with all continuing education/professional development requirements set by FP Canada; and
   e) Notifying FP Canada of any changes to the Certificant’s employment and/or contact information
2. A Certificant shall comply with an order by the FP Canada Standards Council Disciplinary Hearing Panel and/or the FP Canada Standards Council Appeal Hearing Panel. This rule applies equally to current and former Certifcants
3. A Certificant shall reply promptly and completely to any communication from FP Canada or the FP Canada Standards Council in which a response is requested
4. A Certificant shall cooperate fully with a FP Canada Standards Council investigation of a complaint unless legally prevented from doing so. This rule applies equally to current and former Certificants
5. A Certificant shall not make any false or misleading statement to FP Canada or the FP Canada Standards Council

Question 12

Fitness Standards /

Bars to Certification

Answer 12

• Business bankruptcy filed within the last five years;
• Revocation or suspension of one (1) year or longer, of a professional licence or credential
• Revocation or suspension of one (1) year or longer, of a financial services licence or registration
• Pleading guilty, being found guilty or being convicted of a criminal offence
• Being found in breach of an Order of a superior or appellate court of a province or territory of Canada;
• breached the education provider’s code of ethics or code of conduct, and/or to have engaged in academic misconduct.

Currently in personal bankruptcy proceedings;

Question 13

Practice Standards 10

WHat are they…headings only?

Answer 13

1. Explain the role of the Financial Planner and Value of the Financial Planning Process
2. Define the Terms of the Engagement
3. Identify the Client’s Goals, Needs, and Priorities
4. Gather the Client’s Information…quantitative and qualitative information
5. Assess the Client’s Current Situation
6. Identify and Evaluate the Appropriate Financial Planning Strategies
7. Develop the Financial Planning Recommendations
8. Compile and Present the Financial Planning Assumptions and Recommendations and Supporting Rationale
9. Discuss Implementation Action, Responsibilities, and Time Frames
10. Implement the Financial Planning Recommendations

Question 14

Practice Standards

Name and Explain

Answer 14

1. Explain the Role of the Financial Planner and Value of the Financial Planning Process. Ensure the client understands the role of a financial planner and the value of the process of financial planning in identifying and meeting the client’s personal goals, needs and priorities.

2. Define the Terms of the Engagement. The Certificant will work with the client to define and agree on the scope of the financial planning engagement, whether an initial or review engagement.
3. Identify the Client’s Goals, Needs and Priorities. Discuss the client’s personal goals, needs and priorities before identifying possible strategies or making recommendations.
4. Gather the Client’s Information. Gather sufficient quantitative and qualitative information relevant to the engagement before making and/or implementing any recommendations.
5. Assess the Client’s Current Situation. Identify and evaluate the strengths and weaknesses in the client’s financial situation, perform required calculations, develop needed projections and analyze and integrate the resulting information relative to the client’s personal goals, needs and priorities.
6. Identify and Evaluate the Appropriate Financial Planning Strategies. Identify and assess the possible financial planning strategies to achieve the client’s personal goals, needs and priorities.
7. Develop the Financial Planning Recommendations. Develop and prioritize recommendations to help meet the client’s personal goals, needs and priorities and aim to optimize the client’s financial position.
8. Compile and Present the Financial Planning Assumptions and Recommendations and Supporting Rationale. Document and present the financial planning assumptions and recommendations and supporting rationale in a way that allows the client to make an informed decision.
9. Discuss Implementation Action, Responsibilities and Time Frames. Gain the client’s agreement regarding implementation actions, responsibilities and time frames. Stress the importance of a review and ongoing monitoring of the client’s situation relative to their personal goals, needs and priorities periodically and as needed based on material changes in personal or external circumstances.
10. Implement the Financial Planning Recommendations. Complete the implementation actions for which the Certificant has assumed responsibility.

Question 15

Use of Technology?

Answer 15

1. When relying on or using technology in the financial planning process, a Certificant:

• a)Must take reasonable proactive steps to gain a general understanding of the methodologies underlying the technology that have a direct impact on financial planning projections and recommendations;
• b)Must have an understanding of the financial assumptions underlying the technology that have a direct impact on financial planning projections and recommendations;
• c)Must validate that the inputs and assumptions used are reasonable and appropriate based on the client’s circumstances; and
• d)Must validate that the outputs generated are reasonable and appropriate for the client before relying on them, or presenting the final recommendations or strategies to the client

1. In all cases, irrespective of the data used, the material assumptions used as well as the rationale must be documented, and clearly communicated to clients.