10 CFP Code of Ethics Flashcards

Terms Definitions
Code of Ethics and Professional Responsibility (Code of Ethics)
seven ethical principles certificants and registrants should meet in all of their professional activities
Rules of Conduct
binding professional norms that protect the public and advance professionalism
Financial Planning Practice Standards
describe the best practices expected of certificants engaged in financial planning and refer to those sections of the Rules of Conduct that provide ethical guidance
“Fee-only.”
all of the certificant’s compensation from all of his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage or performance-based fees.
“Personal financial planning process” or “financial planning process”
Establishing and defining the client-planner relationship,
Gathering client data including goals,
Analyzing and evaluating the client’s current financial status,
Developing and presenting recommendations and/or alternatives,
Implementing the recommendations, and
Monitoring the recommendations.
It is not necessary to provide a written financial plan to engage in financial planning.
“Registrant”
denotes individuals who are not currently certified but have been certified by CFP Board in the past and have an entitlement, direct or indirect, to potentially use the CFP® marks.
Code of ethics and responsibility
seven Principles form the basis of CFP Board’s Rules of Conduct, Practice Standards and Disciplinary Rules
Integrity
Objectivity
Competence
Fairness
Confidentiality
Professionalism
Diligence
Rules of Conduct: Rule 1.1
certificant and the prospective client or client shall mutually agree upon the services to be provided by the certificant.
certificant’s services
Rules of conduct: Rule 1.2
certificant’s services include financial planning or material elements of the financial planning process, certificant shall provide written information and/or discuss with the prospective client or client the following:
a. The obligations and responsibilities of each party under the agreement with respect to:
i. Defining goals, needs and objectives,
ii. Gathering and providing appropriate data,
iii. Examining the result of the current course of action without changes,
iv. The formulation of any recommended actions,
v. Implementation responsibilities, and
vi. Monitoring responsibilities.
b. Compensation
c. Terms to offer proprietary products
d. Terms to use other entitites
Rules of Conduct: Rule 1.3
If services include financial planning or material elements of the financial planning shall enter into a written agreement governing the financial planning services (“Agreement”).
Specifying:
a. The parties to the Agreement,
b. The and duration,
c. How and on what terms each party can terminate the Agreement
d. The services to be provided as part of the Agreement.
Rules of conduct: Rule 1.4
certificant shall at all times place the interest of the client ahead of his or her own
ethical duty to inform potential clients if they believe circumstances will prevent them from providing a certain service
Rules of conduct: Rule 2.1
certificant shall not communicate, directly or indirectly, to clients or prospective clients any false or misleading information directly or indirectly related to the certificant’s professional qualifications or services.
Rules of conduct: Rule 2.2
certificant shall disclose to a prospective client or client the following information:
costs and compensation including:
Costs to the certificant and/or the certificant’s employer
Terms under which other compensation may be earned
General summary of conflicts of interest
Information about employer
Contact information
Disclosures must be in writing if financial planning or material elements

Timely disclosure of changes to above
Rules of Conduct: 3.1
certificant shall treat information as confidential except as required in response to proper legal process
Rules of Conduct 3.2
certificant shall take prudent steps to protect the security of information and property, including the security of stored information, whether physically or electronically, that is within the certificant’s control.
Rules of Conduct: 3.3
If a certificant cannot obtain the necessary information, the certificant shall inform the prospective client or client of any and all material deficiencies.
Rules of Conduct: 3.4
certificant shall clearly identify the assets, if any, over which the certificant will take custody, exercise investment discretion, or exercise supervision
Rules of Conduct: 3.5
certificant shall identify and keep complete records of all funds or other property of a client in the custody, or under the discretionary authority, of the certificant
Rules of Conduct: 3.6
A certificant shall not borrow money from a client unless it is a family member or the client is an institution in the business of lending money
Rules of Conduct 3.7
certificant shall not lend money to a client unless it is a family member of the certificant is an employee of a money lending institution
Rules of Conduct: 3.8
certificant shall not commingle a client’s property with the property of the certificant or the certificant’s employer, unless the commingling is permitted by law or is explicitly authorized and defined in a written agreement
Rules of Conduct 3.9
A certificant shall not commingle a client’s property with other clients’ property unless permitted by law or the certificant has both explicit written authorization to do so from each client involved and record keeping to keep separate
Rules of conduct 3.10
certificant shall return a client’s property to the client upon request
Rules of conduct 4.1
treat prospective clients and clients fairly and provide professional services with integrity and objectivity
Rules of conduct 4.2
certificant shall offer advice only in those areas in which he or she is competent to do so
Rules of conduct 4.3
certificant shall be in compliance with applicable regulatory requirements
Rules of conduct 4.4
certificant shall exercise reasonable and prudent professional judgment in providing professional services to clients.
Rules of conduct 4.5
certificant shall make and/or implement only recommendations that are suitable for the client.
Rules of conduct 4.6
certificant shall provide reasonable and prudent professional supervision or direction to any subordinate or third party to whom the certificant assigns responsibility
Rules of conduct 4.7
certificant shall advise his or her current clients of any certification suspension or revocation
Rules of conduct 5.1
certificant who is an employee/agent shall perform professional services with dedication to the lawful objectives of the employer/principal and in accordance with CFP Board’s Code of Ethics.
Rules of conduct 5.2
certificant who is an employee/agent shall advise his or her current employer/principal of any certification suspension or revocation
Rules of conduct 6.1
certificant shall abide by the terms of all agreements with CFP Board, including, but not limited to, using the CFP® marks properly and cooperating fully with CFP Board’s trademark and professional review
Rules of conduct 6.2
certificant shall meet all CFP Board requirements, including continuing education requirements
Rules of conduct 6.3
certificant shall notify CFP Board of changes to contact information within 45 days
Rules of conduct 6.4
certificant shall notify CFP Board in writing of any conviction of a crime, except misdemeanor traffic offenses or traffic ordinance violations unless such offense involves the use of alcohol or drugs within 10 days
Rules of conduct 6.5
certificant shall not engage in conduct which reflects adversely on his or her integrity or fitness as a certificant.
CFP Board
professional regulatory organization that was founded in 1985
enforcing education, examination, experience and ethics requirements for CFP® professionals
Each Practice Standard consists of:
statement regarding an element of the financial planning process
relationship of the Practice Standard to the Code of Ethics and Rules of Conduct
expected impact of the Practice Standard on the public, the profession and the practitioner
Practice Standards: 100 Series:
Establishing and Defining the Relationship with the Client
Establishing and Defining the Relationship with the Client
100-1: Defining the Scope of the Engagement
The financial planning practitioner and the client shall mutually define the scope of the engagement before any financial planning service is provided.
relates to CFP Board’s Code of Ethics and Rules of Conduct:
Principle 4 – Fairness
Principle 7 – Diligence and Rules 1.1, 1.2, 1.3 and 2.2
Practice Standards: 200 Series
Gathering Client Data
200-1: Determining a Client’s Personal and Financial Goals, Needs and Priorities
The financial planning practitioner and the client shall mutually define the client's personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.
200-2: Obtaining Quantitative Information and Documents
The financial planning practitioner shall obtain sufficient quantitative information and documents about a client relevant to the scope of the engagement before any recommendation is made and/or implemented.
relates to CFP Board’s Code of Ethics and Rules of Conduct:
Principle 7 – Diligence and
Rules 3.3, 4.4 and 4.5
Practice Standards: 300 Series
300-1: Analyzing and Evaluating the Client’s Information
A financial planning practitioner shall analyze the information to gain an understanding of the client's financial
This Practice Standard relates to CFP Board’s Code of Ethics and Rules of Conduct:
• Principle 2 – Objectivity
• Principle 3 – Competence
• Principle 7 - Diligence and
Rules 1.4, 4.1, 4.4 and 4.5
Practice standards: 400 Series
Developing and Presenting the Financial Planning Recommendation(s)
400-1: Identifying and Evaluating Financial Planning Alternative(s)
The financial planning practitioner shall consider sufficient and relevant alternatives to the client's current course of action in an effort to reasonably achieve the client's goals, needs and priorities.
400-2: Developing the Financial Planning Recommendation(s)
The financial planning practitioner shall develop the recommendation(s) based on the selected alternative(s) and the current course of action in an effort to reasonably achieve the client's goals, needs and priorities.
400-3: Presenting the Financial Planning Recommendation(s)
The financial planning practitioner shall communicate the recommendation(s) in a manner and to an extent reasonably necessary to assist the client in making an informed decision.
Standard relates to CFP Board’s Code of Ethics and Rules of Conduct:
• Principle 1 – Integrity
• Principle 2 – Objectivity
• Principle 6 – Professionalism
Rules 2.1, 4.1, 4.4 and 4.5
Practice Standards: 500 Series
Agreeing on Implementation Responsibilities
The financial planning practitioner and the client shall mutually agree on the implementation responsibilities consistent with the scope of the engagement.
500-2: Selecting Products and Services for Implementation
The financial planning practitioner shall select appropriate products and services that are consistent with the client's goals, needs and priorities.

Standard relates to CFP Board’s Code of Ethics and Rules of Conduct:
• Principle 2 – Objectivity
• Principle 4 – Fairness
• Principle 6 – Professionalism
• Principle 7 – Diligence
Rules 1.2, 1.4, 2.2, 4.1, 4.4 and 4.5
Practice Standards: 600 Series
Monitoring
600-1: Defining Monitoring Responsibilities
The financial planning practitioner and client shall mutually define monitoring responsibilities.
Standard relates to CFP Board’s Code of Ethics and Rules of Conduct:

Principle 7 – Diligence and
Rules 1.2, 3.3, 3.4 and 4.1
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