HS 300 Flashcards – Module 10
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[h] HS300 – Module 10
[q] CFP Board Code of Ethics
[a] A document created by the CFP Board that sets forth principles that guide the behavior of CFP® professionals.
[q] CFP Board Code of Ethics Requirements
[a] CFP® professional must:
Act with honesty, integrity, competence, and diligence.
Act in the client’s best interest.
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.
[q] Integrity
[a] A requirement of the Code of Ethics. Demands honesty and candor.
[q] Competence
[a] A requirement of the Code of Ethics. A CFP® professional must possess relevant knowledge and the skill to apply that knowledge.
[q] Diligence
[a] A requirement of the Code of Ethics. A CFP® professional must provide services and respond to reasonable client inquiries in a timely and thorough manner.
[q] Standards of Conduct
[a] A document created by the CFP Board. Consists of:
Duties owed to clients.
Financial planning and application of the practice standards for the financial planning process.
Practice standards for the financial planning process.
Duties owed to firms and subordinates.
Duties owed to CFP board.
Prohibition on circumvention.
[q] Professionalism
[a] A duty owed by a CFP® professional to clients at all times. Clients and others must be treated with dignity, courtesy, and respect.
[q] Sound and Objective Judgment
[a] A duty owed by a CFP® professional to clients at all times. A professional cannot accept any gift that could compromise objectivity.
[q] Comply with the Law
[a] A duty owed by a CFP® professional to clients at all times. A professional cannot participate in or assist another in the violation of laws.
[q] Confidentiality and Privacy
[a] A duty owed by a CFP® professional to clients at all times. A professional must keep confidential any non-public personal information.
[q] Representing Compensation Method
[a] A duty owed by a CFP® professional to clients at all times. A professional may not make false representations about compensation.
[q] Fee-only
[a] A professional that receives compensation exclusively in the form of fees, such as wrap fees.
[q] Fee-based
[a] A professional that receives both fees and sales-related compensation.
[q] Borrowing or Lending Money
[a] A duty owed by a CFP® professional to clients at all times. A professional may not borrow money from or lend money to a client, unless:
The client is a member of the family.
The client is in the business of lending money.
[q] Duties When Communicating With Clients
[a] Duties owed by a CFP® professional to clients at all times. Professionals must provide accurate information to clients.
[q] Duties When Selecting and Using Technology
[a] Duties owed by a CFP® professional to clients at all times. Professionals must exercise reasonable care when selecting, using, or recommending any software or other technology while providing services.
[q] Financial Advice
[a] Communication viewed as a recommendation whether or not to:
Develop or implement a financial plan.
Invest in or dispose of financial assets.
Implement investment policies or strategies.
[q] Additional Duties when Providing Financial Advice
[a] Additional duties that apply when providing financial advice:
Fiduciary duty.
Duty to disclose and manage conflicts of interest.
Duties when working with additional persons.
Duty to provide information to the client.
[q] Duty of Loyalty
[a] A duty that requires a fiduciary to place interests of the client above their own and their Firm’s.
[q] Duty of Care
[a] A duty that requires a fiduciary to act with the care, skill, prudence, and diligence.
[q] Duty to Follow Client Instruction
[a] A duty that requires a fiduciary to comply with all terms of Engagement.
[q] Financial Planning
[a] A collaborative process that helps maximize a client’s potential for meeting their goals. Integrates relevant elements of a client’s personal and financial circumstances.
[q] Additional Duties when Providing Financial Planning
[a] Additional duties that apply when providing financial planning services:
All duties applicable to planners that provide financial advice (includes fiduciary duty).
Practice Standards for the Financial Planning Process.
Information provided to a client in writing.
[q] Duties Owed to Firms and Subordinates
[a] Duties owed:
Use Reasonable Care When Supervising.
Comply with Lawful Objectives of CFP® Professional’s Firm.
Provide Notice of Public Discipline
[q] Duties Owed to CFP Board
[a] Duties owed to CFP Board:
Refrain from Adverse Conduct.
Reporting.
Cooperation.
[q] Disciplinary procedures from CFP Board
[a] Disciplinary procedures:
Private Censure.
Public Letter of Admonition.
Suspension.
Revocation.
[q] Private Censure
[a] A disciplinary procedure available to the CFP Board. Represents an unpublished written disapproval.
[q] Public Letter of Admonition
[a] A disciplinary procedure available to the CFP Board. Represents a publishable written disapproval.
[q] Suspension
[a] A disciplinary procedure available to the CFP Board. Suspension can last for up to five years.
[q] Revocation
[a] A disciplinary procedure available to the CFP Board. Represents a permanent suspension of a CFP® professional’s right to use the marks.
[q] Conduct that will Permanently Bar Certification
[a] Conduct that will always permanently bar an individual from becoming certified:
Felony conviction for theft, embezzlement or other financially-based crimes.
Felony conviction for tax fraud or other tax-related crimes.
Nonadministrative revocation of a financial professional license.
Felony conviction for any degree of murder or rape.
Felony conviction for any other violent crime within the last five years.
[q] Conduct Resulting in Presumptive Bar
[a] Conduct on the presumptive bar list (can be forgiven by petitioning CFP Board):
Revocation or suspension of a financial or non-financial professional license.
Felony conviction for nonviolent crimes, including perjury, within the last five years.
Felony conviction for violent crimes that occurred more than five years ago.
Two or more personal or business bankruptcies.
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