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CFP 3/17 > Ethics and Law > Flashcards

Ethics and Law Flashcards

1
Q

Job Task Domains

A
  1. Establishing and defining the client planner relationship
  2. Gathering information necessary to fulfill the engagement
  3. Analyzing and evaluating the client current financial status
  4. Developing recommendations
  5. Communicating recommendations
  6. Implementing recommendations
  7. Monitoring recommendations
  8. Practicing within professional and regulatory standards
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2
Q

Domain 1

A

Establishing and defining client planner relationship:

  1. Identify the client (individual, business, family..)
  2. Discuss needs and expectations
  3. Discuss process with the client
  4. Explain the scope of services offered
  5. Assess ability to meet clients needs and expectations
  6. Discuss responsibilities
  7. Define and document the scope of the engagement
  8. Provide Disclosures (regulatory, compensation, conflicts of interest)
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3
Q

Domain 2

A 
Gather information necessary to fulfill engagement:
Qualitative
1. explore needs, priorities, and goals
2. explore time horizon for each goal
3. assess knowledge and experience
4. assess risk exposure
5. assess risk tolerance
Quantitative
6. assets, liabilities, income, expenses, estate planning docs, education plan resources, retirement plan info, gov benefits, tax docs, investment statements, insurance policies, business docs, inheritances..)
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4
Q

Domain 3

A

Analyzing and Evaluating Client’s Current Financial Status
1. Evaluate strengths and weaknesses of financial situation (balance sheet, cash flow, budget, capital needs, insurance, retirements, investments, tax, estate, business, education, etc…

  1. Identify tools and techniques to conduct analysis
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5
Q

Domain 4

A

Developing the Recommendations

  1. Synthesize findings
  2. Consider alternatives
  3. Consult other professionals
  4. Develop recommendations
  5. Document recommendations
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6
Q

Domain 5

A

Communicating Recommendations
1. Present the financial plan
goals, assumptions, observations, alternatives,
recommendations
2. Obtain feedback and revise if necessary
3. Provide documentation of recommendations and disclosures
4. Verify acceptance

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7
Q

Domain 6

A

Implementing Recommendations

  1. prioritize and create a timeline
  2. assign responsibility
  3. support client with implementation
  4. share as authorized
  5. define monitoring responsibilities
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8
Q

Domain 7

A

Monitoring the Recommendations

  1. Evaluate changes to client situation
  2. Review performance and progress
  3. Review changes in economic environment
  4. Make recommendation
  5. Review scope of work and redefine engagement
  6. Ongoing support
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9
Q

Domain 8

A

Practice within Professional and Regulatory Standards

  1. CFP Code of ethics
  2. Disciplinary rules and procedures
  3. Financial planning practice standards
  4. Manage practice risk
  5. Maintain awareness and comply with regulatory standards.
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10
Q

Code of Ethics and Professional Responsibility Principles

A 
IOC FCPD
International Olympic Comittee is Fair, Competent and Proficient Daily
Integrity
Objectivity
Competency
Fairness
Confidentiality
Professionalism
Diligence
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11
Q

Rules of Conduct

A

RIPOOO
Rule 1 - Relationship with client (define)
Rule 2 - Information disclosed to prospective client
Rule 3 - Property of client
Rule 4- Obligation to client
Rule 5 - Obligation to employer
Rule 6- Obligations to CFP Board

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12
Q

Financial Planning Practice Standards

A

100- Establishing and defining the relationship with the client (Domain 1)
200 - Determining the clients personal and financial goals, needs and priorities (Domain 2)
300 - Analyzing and evaluating the clients financial status (Domain 3)
400-1 Identifying and evaluating planning alternatives (Domain 4) May consult others
400-2 Developing financial planning recommendations (Domain 4)
400-3 Presenting Financial Planning recommendations (Domain 5) Advantages/disadvantages
500 Implementing financial planning recommendations (Domain 6)
600 Defining monitoring responsibilities (Domain 7)

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13
Q

1985

A

Year CFP board was founded

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14
Q

Costs that must be disclosed

A 
Code of conduct Rule 2.2
12b-1
Cash bonuses, incentives received for selling product
Trailing commissions
Compensation from wrap fees
Trading fees (if passed to client)
Ticket charges (if passed to the client)
Admin or management fees on products
Solicitation fees
etc..
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15
Q

Continuing Education

A

30 hours per reporting period

*note depending on your birthday may be less than 30 hours the first reporting period only (could be less than 2 years)

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16
Q

Disclosures in Writing

A 
Parties to the agreement
Date and duration
Terms under which agreement can end
Services to be provided
Specific compensation arrangements
Summary of conflicts of interest
Area of expertise
Contact Information

Annually there after:
Cost and compensation
other sources of comp paid to CFP or employer

17
Q

Verbal Disclosures

A

Can be in writing but not required..

Obligation/ Responsibility of parties
General compensation to any party or affiliate
Terms by which proprietary products can be offered
Terms by which other entities can be used
(must be given time to review if in writing)

18
Q

Included in Brochure

A

Written disclosure to client detailing
-Advisory Service provided and fees
-Types of securities and investments
-Education and background of the Adviser
-Participation or interest in securities transactions
-MUST be given 48 hrs prior to entering into contract or at the time of contract but client has 5 days to “look and see”
ADVII

19
Q

Notifying the board -contact info change or crime conviction

A 
Contact info- 45 days
email
telephone
physical address
etc

Convicted of crime- 10 calendar days
*no misdemeanor traffic violations unless involve drugs and alcohol

20
Q

ALWAYS bar from CFP

A

Felony-theft, embezzlement, financial crimes, tax fraud, tax crimes.

Revocation of financial professional designation unless administrative in nature (like not renewing) includes accountant

Felony conviction - murder or rape

Felony violent crime 5 years

21
Q

Presumed Unacceptable - conduct

A
  • 2 or more bankruptcy in last 5 years
  • Revocation of non-financial professional-real estate, attorney.
  • Suspension of financial professional license
  • Felony conviction non-violent crimes (perjury) last 5 years
  • Felony conviction violent crimes other than murder or rape more than five years ago

CFP 3/17 (48 decks)

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