Conduct Flashcards

1
Q

Determination of Financial Advice

A

Determination of whether financial advice has been provided is an objective rather than subjective inquiry.

The more individually tailored the communication is to the client, the more likely the communication will be viewed as Financial Advice.

Exercising discretionary authority over clients assets is considered financial advice

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2
Q

Conduct Unacceptable (Permanently barred from becoming certified)

A
  1. Felony Conviction for theft, embezzlement or other financially based crimes
  2. Felony conviction for tax and fraud or other tax-related crimes
  3. Revocation of financial licences (exception: admin revocation for not paying dues)
  4. Felony conviction for any degree of murder or rape
  5. Felony conviction of other violent crimes within last 5 years.
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3
Q

Conduct - Presumptive Bar

A
  1. two or more personal or business bankruptcies
  2. Revocation or suspension of a non-financial professional license (exception - admin revok)
  3. Suspension of a financial professional license (exception - admin revok)
  4. Felony conviction for non-violent crimes (including perjury) within the last 5 years
  5. Felony conviction for violent crimes other than murder or rape that occurred more than 5 yrs ago
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4
Q

Fin Planning Process (Step 1)

A

Understanding the Client’s Personal and Financial Circumstances

  1. Obtain Quantitative and Qualitative Information
  2. Analyze Information
  3. Address Incomplete Information
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5
Q

Fin Planning Process (Step 2)

A

Step 2: Identifying and Selecting Goals

Identify potential goals

Help the Clients select and prioritize goals

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6
Q

Fin Planning Process (Step 3)

A

Step 3. Analyzing the Client’s Current Course of Action and Potential Alternative Course(s) of Action

Analyze the Clients’ current course of action

Analyze potential alternative courses of action

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7
Q

Fin Planning Process (Step 4)

A

Step 4: Developing the Financial Planning Recommendation(s)

For each recommendation, the CFP® professional must consider:
Assumptions and estimates used to develop the recommendations

Basis for making the recommendation

Timing and priority of the recommendation

Whether the recommendation is independent or must be implemented with another recommendation

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8
Q

Fin Planning Process (Step 5)

A

Step 5: Presenting the Financial Planning Recommendation(s)

For each recommendation, the CFP® professional must:
Present to the Clients the selected recommendation(s) and information that was required to consider when developing the recommendation(s)

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9
Q

Fin Planning Process (Step 6)

A

Step 6: Implementing the Financial Planning Recommendation(s)

Address implementation responsibilities

Identify, analyze, and select actions, products, and services

Recommend one or more actions, products, and services for implementation

Select and implement actions, products, or services

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10
Q

Fin Planning Process (Step 7)

A

Step 7: Monitoring Progress & Updating

Establish monitoring and updating responsibilities

Monitor the Clients’ progress

Obtain current qualitative and quantitative information

Update goals, recommendations, or implementation decisions

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11
Q

To whom do the Fitness Standards apply to?

A

candidates for CFP® certification

professionals eligible for reinstatement (PERs)

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12
Q

6 principles of code of ethics

A

must be upheld by CFP® professionals at all times.

a CFP® professional must:

  1. Act with honesty, integrity, competence, and diligence.
  2. Act in the client’s best interests.
  3. Exercise due care.
  4. Avoid or disclose and manage conflicts of interest.
  5. Maintain the confidentiality and protect the privacy of client information.
  6. Act in a manner that reflects positively on the financial planning profession and CFP® certification
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13
Q

What is Fee Based

A

Sales-Related Compensation is more than a de minimis economic benefit, 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 other than the CFP® Professional’s Firm.

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14
Q

Factors for financial advice that requires financial planning

A

The number of relevant elements of the Client’s personal and financial circumstances that the Financial Advice may affect;

The portion and amount of the Client’s Financial Assets that the Financial Advice may affect;

The length of time the Client’s personal and financial circumstances may be affected by the Financial Advice;

The effect on the Client’s overall exposure to risk if the Client implements the Financial Advice; and

The barriers to modifying the actions taken to implement the Financial Advice.

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15
Q

Examples of Sales Related Comp

A

commissions,
trailing commissions,
12b-1 fees,
spreads,
transaction fees,
revenue sharing,
referral or solicitor fees, or similar consideration.

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16
Q

When the CFP® professional has responsibilities for monitoring and updating,

A

the CFP® professional must communicate to the Client:

iii. The Client’s responsibility to inform the CFP® professional of any Material changes to the Client’s qualitative and quantitative information;

iv. The CFP® professional’s responsibility to update the Financial Planning recommendations;

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17
Q

of days to notify DEC for presumptive bar activities

A

30 calendar days

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18
Q

of days to report any/all adverse conduct, bankruptcies and material changes

A

90 days

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19
Q

Disclosure of conflicts can be delivered how?

A

in writing or verbally

20
Q

Administrative Order of Suspension

A

Failure to answer a complaint within 30 days will result in CFP Board Counsel delivering an Administrative Order of Suspension (mandatory 1 year 1 day) or an Administrative Order of Revocation.

21
Q

Administrative Order of Revocation

A

Failure to answer a complaint within 30 days will result in CFP Board Counsel delivering an Administrative Order of Suspension (mandatory 1 year 1 day) or an Administrative Order of Revocation.

22
Q

of days to deliver written answer to an amended complaint

A

14 calendar days

23
Q

Who does Temp Bar and Permanent Bar status apply to?

A

Respondents who are not currently CFP professionals (i.e. CFP Candidates)

24
Q

minimum amount of time that a DEC-imposed suspension must last.

A

the DEC may issue a suspension for a specified period, minimum 90 days; maximum 5 years

25
Next action after CFP B finds probable cause of misconduct
Send letter of dismissal send settlement offer send complaint
26
Sanctions in order of severity (low to high)
Private Censure (lowest) Public Censure Suspension Revocation (highest)
27
Time within which respondent must respond to notice of investigation
Respondent must responded within 14 calendar days from delivery to respondent
28
time to file a notice identifying all witnesses
30 calendar days after delivery or the complaint or the filing of petition or otherwise specified by DEC
29
what items are due within 45 days of delivery of complaint
written statements, hearing documents, stipulations
30
Public censure
A public censure is a written reproach of Respondent that CFP Board publishes in accordance with Article 17.7 (General Provisions, Publication).
31
Appeals Committee
will review and decide all appeals.
32
of and qualification of Hearing Panel Members
A Hearing Panel must consist of at least three persons. A majority of the Hearing Panel must be CFP® professionals, and a majority must be DEC members.
33
interim suspension
a suspension of a CFP® professional’s Certification and Trademark License during the pendency of proceedings.
34
35
Sec Act of 1933
Requires registration of IPO
36
Glass-Steagall Act of 1934
Prohibited financial instituion from consolidation and offering any combination of traditional commercial banking, investment banking and insurance
37
Securities Exchange Act of 1934
Requires companies with previously issued securities to keep information current Created SEC to enforce security laws Requires BDs to register with SEC
38
Maloney Act of 1938
Brought OTC under SEC regulation Called for self-regulation OTC securities dealders
39
Federal Bankruptcy Act of 1938
Provides for liquidation and re-org of firms that might be able to survive Amended in 1978;
40
Investment Company Act of 1940
Extended securities laws to investment companies (mutual funds)
41
Investment Advisers Act of 1940
Requires registration for and regulates activities of investment advisers
42
McCarren - Ferguson Act of 1945
Insurance regulated at the state-level as long as adequte regulations are implemented and executed
43
Security Investor Protection Act of 1970
Established the SIPC; SIPC insures consumers accounts up to $500K in securities and $250K in cash coverage (if broakrage firm fails)
44
Insider Trading and Securities Fund Enforcement Act of 1988
Defined what is considered insider training and estbalished pentalities for insider training
45
Gramm-Leach-Bliley Act of 1999
Addresses how financial insituation manage private information of individuals; Repealed Glass-Steagal Act (that prohibited financial insitution consolidation)