Code of Ethics Flashcards
Fiduciary
Advisor must act in best interest of a Client
Duties of Loyalty 1,2,3
- Put interest of client in front of interest of Advisor
- Avoid Conflicts of interest
- Act without regard to all interests of the advisor
Duty of Care
A CFP® professional must act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the Client’s goals, risk tolerance, objectives, and financial and personal circumstances.
Duty to Follow Clients instruction
A CFP® professional must comply with all objectives, policies, restrictions, and other terms of the Engagement and all reasonable and lawful directions of the Client.
Fee-Only
CFP® Professional’s Firm receive no Sales-Related Compensation
Fee-Based
“fee and commission”
method of those who receive both fees and Sales-Related Compensation.
Sales-Related Compensation
including any bonus or portion of compensation, resulting from a Client purchasing or selling Financial Assets, from a Client holding Financial Assets for purposes other than receiving Financial Advice, or from the referral of a Client to any person or entity
- Soft Dollar
- Reasonable or Customary Fees
- Non Monetary Benefits
- A fee the Related Party solicitor receives for soliciting clients for the CFP
Borrowing/Lending Money as a CFP
A CFP® professional may not, directly or indirectly, borrow money from or lend money to a Client unless:
i. The Client is a member of the CFP® professional’s Family; or
ii. The lender is a business organization or legal entity in the business of lending money.
NO Commingling of clients assets with assets of CFP
Def of Financial Planning
a 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.
Financial Planning 7 Step Process
- Understand Clients Personal and Financial Circumstances
- Identifying and Selecting Goals
- Analyze Clients Current course of action and potential alternative course
- Develop Financial planning recommendations
- Present Recommendations
- Implement Recommendations
- Monitor progress and Update
Financial PlanningnProcess 1, 2 & 3
- Understand clients personal and financial circumstance
- Qualitative/Quantitative Client info
- Analyze Info
- Address missing info - Identify and Selecting Goals
- Identify Potential Goals
- Set Priorities - Identify clients Current Course of action and potential alternative course
- Compare current course to Goals
-show alternative course with advantages/disadvantages
Financial Planning Process 4 & 5
- Develop Financial Planning Recommendations
- From potential course of action CFP must make one or more recommendation designed to maximize the potential to meet clients goals.
- Timing and priority Recommendations
- Weather Recommendation is independent or must be implemented with another recommendations - Presenting Financial Planning Recommendations
- Present plan and accompanying info with said plan
Financial Planning Process 6 & 7
- Implement Financial Plan
- Address implantations responsibilities
- Identify products and Service
- Recommend Products and Service
- Selecting Products and Service - Monitor progress and Updating
- Monitor and update responsibilities
- Monitors Clients process
- Obtain current Qualitative and Quantitative info
- Updating Goals and Recommendations
Felony
an offense punishable by a sentence of at least one-year imprisonment or a fine of at least $1,000.
Relevant Misdemeanor
a Criminal offense involving fraud, theft, misrepresentation, other dishonest conduct, crimes of moral turpitude, violence, or a second (or more) alcohol and/or drug-related offense.
