Ethics

Question 1

When is Fiduciary Duty required?

Answer 1

when providing financial advice

Question 2

Components of Fiduciary Duty

Answer 2

1. Duty of Loyalty
2. Duty of Care
3. Duty to Follow Client Instruction

Question 3

Components of Duty of Loyalty

Answer 3

1. Place the interest of the Client above the Professional and the Firm
2. Avoid or disclose and manage Conflicts of Interest
3. Act without regard to the interests of anyone other than the Client

Question 4

Options when the CFP Professional is not sufficiently competent in a particular area to provide Services

Answer 4

1. Gain competence
2. Obtain assistance from a competent professional
3. Limit or terminate the Engagement
4. Refer the Client to a competent professional

Question 5

Duty of Diligence involves providing Professional Services by

Answer 5

1. responding to reasonable client inquiries
2. in a timely and thorough manner

Question 6

Duty of Professionalism

Answer 6

Treating others with dignity, courtesy, and respect

Question 7

When a CFP professional will disclose confidential information

Answer 7

1. For ordinary business purposes (client consent, client’s other professionals, CFP’s other professionals, and a client appointed representative)
2. For legal and enforcement purposes (law compliance, investigation compliance, claim compliance, CFP Board compliance, or professional organizations)

Question 8

Material changes, disciplinary history, or bankruptcy information must be disclosed to the client with a specific time period

Answer 8

90 days

Question 9

Duties regarding technology selection, use, and recommendation

Answer 9

1. Exercise reasonable care and judgement
2. Have a reasonable level of understanding
3. Have a reasonable basis for believing that technology produces reliable, objective, and appropriate outcomes

Question 10

The exceptions for borrowing/lending money

Answer 10

1. Family members
2. The lender is in the business of legally lending money

Question 11

Definition of financial planning

Answer 11

collaborative process that helps maximize a Client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the Client’s personal and financial circumstances

Question 12

Factors that will determine whether a CFP professional has agreed to provide FA that requires FP

Answer 12

1. # of relevant elements of the client’s personal and financial circumstances it may affect
2. portion and amount of assets the FA may affect
3. length of time the client’s personal and financial circumstances may be affected
4. effect on the client’s overall exposure to risk
5. barriers to modification once implemented

Question 13

Options if the CFP professional must comply with the Practice Standards but the Client does not agree to engage the CFP professional to provide Financial planning

Answer 13

1. Not enter the Engagement
2. Limit the Scope of the Engagement (to services that do not require the Practice Standards) and describe the services that will not be performed
3. Provide the requested services after informing the Client how FP would benefit them and how the decision may limit the CFP’s FA (CFP does not need to comply)
4. Terminate the Engagement

Question 14

What to consider when developing a FP recommendation

Answer 14

1. assumptions and estimates
2. basis for making the recommending, including how it is designed to meet client goals, effects, and how it integrates elements of the client’s circumstances
3. timing and priority
4. if the recommendation is independent or must be implemented with something else

Question 15

Time requirement for notice to CFP Board for engaging in adverse conduct

Answer 15

30 days

Question 16

Identify the steps in the Financial Planning process

Answer 16

1. Understanding the Client’s Personal and Financial Circumstances
2. Identifying and Selecting Goals
3. Analyzing the Client’s Current Course of Action and Potential Alternative Course(s) of Action
4. Developing the Financial Planning Recommendation(s)
5. Presenting the Financial Planning Recommendation(s)
6. Implementing the Financial Planning Recommendation(s)
7. Monitoring Progress & Updating

Question 17

Role of the CFP Board Counsel

Answer 17

Has the authority to investigate and file a Complaint against a Respondent for alleged violations of the Code of Ethics and Standards of Conduct

Question 18

Role of the Disciplinary & Ethics Committee

Answer 18

the DEC has the authority to issue a final order that finds facts, determines whether a violation has occurred, and, where appropriate, imposes discipline in the form of a sanction.

Question 19

Composition of the DEC

Answer 19

Composed of CFP® professionals and members of the public

Question 20

Composition of the Hearing Panel

Answer 20

3+ people, mostly CFP Professionals and majority DEC members. (1 DEC member must be Chair)

Question 21

Purpose of the Hearing panel

Answer 21

to conduct the disciplinary hearing and issue a recommendation to the DEC

Question 22

time for respondent to answer a CFP Board Counsel complaint

Answer 22

30 days

Question 23

time for respondent to pay the Hearing/Settlement Review Fee or request a waiver/reduction

Answer 23

30 days

Question 24

time for hearing documents, statements, and stipulations

Answer 24

45 days after complaint

Question 25

time for witness list

Answer 25

30 days after complaint

Question 26

notice of hearing from CFP Board Counsel

Answer 26

30 days before the Hearing

Question 27

time to appeal to the board of Directors' Appeals Committee

Answer 27

30 days after DEC Final Order

Question 28

what comes after the Notice of Hearing from CFP Board Counsel?

Answer 28

Hearing before the Hearing Panel

Question 29

what comes after the Hearing?

Answer 29

Hearing Panel issues Recommendations to the DEC

Question 30

what comes after the DEC reviews the recommendation?

Answer 30

the DEC issues their Final Order

Question 31

List the Forms of Discipline in order of increasing severity.

Answer 31

1. Private Censure 2. Public Letter of Admonition 3. Suspension 4. Revocation

Question 32

Define Financial Advice

Answer 32

1. Recommending a course of action with respect to: -a financial plan -value of assets -investment policies, strategies, composition, etc. -selection of professionals or services 2. Discretionary authority over client assets