Paula Stone spent nearly a year and a half completing the CFP education courses and finally passing the exam. Upon submittal of her paperwork, the CFP board found cause to suspend issuance of the CFP certification for 2 years. Will the Board publish such suspension?
a. Yes, suspensions are automatically published
b. No, by the CFP board will require her to notify her clients
c. Maybe, it is at the discretion of the DEC
d. No, Because she never attained the marks
a. Yes, suspensions are automatically published
Todd Hamm, CFP works for ABC Brokerage. ABC sells only commission based proprietary products. Todd is assigned a commission goals for the year and AC’s bonus is based exceeding that goal. Without the bonus, the payout is less than Todd’s living expenses. In additions, ABC’s office space is broken up into shared offices, single person offices and window single person offices. The sharing area is noisy due to constant telephone chatter. Todd is under the gun because he is down in a shared office. A new investment product is bring promoted by by ABC to try to lock up a client;’s total investment account by giving the client airline miles, low interest credit cards and below market mortgage loans. What should Todd do?
a. Explain the new program to all his current clients and potential clients.
b. Quit and find a position with another company
c. Continue to treat clients fairly and provide professional services with integrity and objectivity
d. Enter into agreements with all his clients disclosing compensation arrangements for the companys proprietary products.
d. Enter into agreements with all his clients disclosing compensation arrangements for the company’s proprietary products.
Selling only proprietary products does not violate the CFP Board Code of Ethics if that is disclosed along with the associated comp arrangement.
Dr. Sam and his wife, Cindy, are referred to you. You have performed all the steps in the financial planning process and completed the plan. The doctor wanted to pay under a flat fee arrangement for the plan. He said all his procedures were based on flat fees. Before you start to present the plan, he wanted your fee statement. Both the doctor and wife seem attentive, nodding their heads as you go through the insurance, income tax, investment, and retirement recommendations. However, as you present the estate planning recommendations, he says he will not pay an attorney to preare the documents you are suggesting. What should you do?
a. Go online and download al the necessary documents
b. Disclose to the client that you aren’t a licensed attorney and volunteer to help find the necessary documents
c. Pay an attorney to prepare the documents with the dee you collected for the financial plan
d. Refer your best friend, who is an attorney, and two other attorney’s to the doctor
d. Refer your best friend, who is an attorney, and two other attorney’s to the doctor
Answers a & b violate the Duty of Competence. Answer C is sort of making a long to a client. There is no obligation that you have to implement the [plan. The best answer is D.
Joe bought a home for $300,000 subject to a mortgage of $280,000. If the mortgage principal is $260,000 and the FMV of the home is $340,000 today, how large of a home equity loan can Joe take out and deduct the interest if used for a home renovation?
a. $20,000
b. $60,000
c. $80,000
d. $100,000
c. $80,000
For the interest to be deductible, the loans proceeds must be used for the home. Qualifying home equity debt cannot exceed the difference between the current FMV ($340k) and the current indebtedness ($260k). If the current FMV was $360,000, then the home equity interest allowance cold have been $100,000.
John wants to fund college for his son, age 3. He feels college will cost $20,000 per year in “today’s dollars”. He feels that inflation will be 3% and that he can make 7% after tax on the funds in the account. What amount of yearly contribution does John need to make to his son’s account at the beginning of each of the next 15 years?
a. $4,135
b. $4,382
c. $4,848
d. $8,764
