Determination of Financial Advice
Determination of whether financial advice has been provided is an objective rather than subjective inquiry.
The more individually tailored the communication is to the client, the more likely the communication will be viewed as Financial Advice.
Exercising discretionary authority over clients assets is considered financial advice
Conduct Unacceptable (Permanently barred from becoming certified)
- Felony Conviction for theft, embezzlement or other financially based crimes
- Felony conviction for tax and fraud or other tax-related crimes
- Revocation of financial licences (exception: admin revocation for not paying dues)
- Felony conviction for any degree of murder or rape
- Felony conviction of other violent crimes within last 5 years.
Conduct - Presumptive Bar
- two or more personal or business bankruptcies
- Revocation or suspension of a non-financial professional license (exception - admin revok)
- Suspension of a financial professional license (exception - admin revok)
- Felony conviction for non-violent crimes (including perjury) within the last 5 years
- Felony conviction for violent crimes other than murder or rape that occurred more than 5 yrs ago
Fin Planning Process (Step 1)
Understanding the Client’s Personal and Financial Circumstances
- Obtain Quantitative and Qualitative Information
- Analyze Information
- Address Incomplete Information
Fin Planning Process (Step 2)
Step 2: Identifying and Selecting Goals
Identify potential goals
Help the Clients select and prioritize goals
Fin Planning Process (Step 3)
Step 3. Analyzing the Client’s Current Course of Action and Potential Alternative Course(s) of Action
Analyze the Clients’ current course of action
Analyze potential alternative courses of action
Fin Planning Process (Step 4)
Step 4: Developing the Financial Planning Recommendation(s)
For each recommendation, the CFP® professional must consider:
Assumptions and estimates used to develop the recommendations
Basis for making the recommendation
Timing and priority of the recommendation
Whether the recommendation is independent or must be implemented with another recommendation
Fin Planning Process (Step 5)
Step 5: Presenting the Financial Planning Recommendation(s)
For each recommendation, the CFP® professional must:
Present to the Clients the selected recommendation(s) and information that was required to consider when developing the recommendation(s)
Fin Planning Process (Step 6)
Step 6: Implementing the Financial Planning Recommendation(s)
Address implementation responsibilities
Identify, analyze, and select actions, products, and services
Recommend one or more actions, products, and services for implementation
Select and implement actions, products, or services
Fin Planning Process (Step 7)
Step 7: Monitoring Progress & Updating
Establish monitoring and updating responsibilities
Monitor the Clients’ progress
Obtain current qualitative and quantitative information
Update goals, recommendations, or implementation decisions
To whom do the Fitness Standards apply to?
candidates for CFP® certification
professionals eligible for reinstatement (PERs)
6 principles of code of ethics
must be upheld by CFP® professionals at all times.
a CFP® professional must:
- Act with honesty, integrity, competence, and diligence.
- Act in the client’s best interests.
- Exercise due care.
- Avoid or disclose and manage conflicts of interest.
- Maintain the confidentiality and protect the privacy of client information.
- Act in a manner that reflects positively on the financial planning profession and CFP® certification
What is Fee Based
Sales-Related Compensation is more than a de minimis economic benefit, including
any bonus or portion of compensation,
resulting from a Client purchasing or selling Financial Assets,
from a Client holding Financial Assets for purposes other than receiving Financial Advice, or from the referral of a Client to any person or entity other than the CFP® Professional’s Firm.
Factors for financial advice that requires financial planning
The number of relevant elements of the Client’s personal and financial circumstances that the Financial Advice may affect;
The portion and amount of the Client’s Financial Assets that the Financial Advice may affect;
The length of time the Client’s personal and financial circumstances may be affected by the Financial Advice;
The effect on the Client’s overall exposure to risk if the Client implements the Financial Advice; and
The barriers to modifying the actions taken to implement the Financial Advice.
Examples of Sales Related Comp
commissions,
trailing commissions,
12b-1 fees,
spreads,
transaction fees,
revenue sharing,
referral or solicitor fees, or similar consideration.
When the CFP® professional has responsibilities for monitoring and updating,
the CFP® professional must communicate to the Client:
iii. The Client’s responsibility to inform the CFP® professional of any Material changes to the Client’s qualitative and quantitative information;
iv. The CFP® professional’s responsibility to update the Financial Planning recommendations;
of days to notify DEC for presumptive bar activities
30 calendar days
of days to report any/all adverse conduct, bankruptcies and material changes
90 days
Disclosure of conflicts can be delivered how?
in writing or verbally
Administrative Order of Suspension
Failure to answer a complaint within 30 days will result in CFP Board Counsel delivering an Administrative Order of Suspension (mandatory 1 year 1 day) or an Administrative Order of Revocation.
Administrative Order of Revocation
Failure to answer a complaint within 30 days will result in CFP Board Counsel delivering an Administrative Order of Suspension (mandatory 1 year 1 day) or an Administrative Order of Revocation.
of days to deliver written answer to an amended complaint
14 calendar days
Who does Temp Bar and Permanent Bar status apply to?
Respondents who are not currently CFP professionals (i.e. CFP Candidates)
minimum amount of time that a DEC-imposed suspension must last.
the DEC may issue a suspension for a specified period, minimum 90 days; maximum 5 years
