Financial Planning Process/Ethics and Standards

Question 1

7 Step Process

Answer 1

1. Understanding the Client’s Personal and Financial Circumstances
2. Identifying and Selecting Goals
3. Analyzing the Client’s current course of action and alternatives
4. Develop Recommendations
5. Presenting Recommendations
6. Implementing Recommendations
7. Monitoring Progress and Updating

Question 2

8 Principal Knowledge Categories

Answer 2

1. Professional Conduct and Regulations
2. General FP Principles
3. Psychology of FP
4. Risk Management and Insurance Planning
5. Investment Planning
6. Tax Planning
7. Retirement Savings and Income Planning
8. Estate Planning

Question 3

Honor the interest of the client above all others

Answer 3

Fiduciary Standard

Question 4

Fiduciary Standard

Answer 4

Honor the interests of the client above all others

Question 5

Duty of Loyalty

Answer 5

• Hold interest of client above self and firm
• Balance conflicts of interest so as to maintain client’s best interest above all

Question 6

• Hold interest of client above self and firm
• Balance conflicts of interest so as to maintain client’s best interest above all

Answer 6

Duty of Loyalty

Question 7

Duty of Care

Answer 7

To act with skill, prudence, and diligence of a prudent professional in consideration of the client’s goals, risk tolerance, and personal circumstances.

Question 8

To act with skill, prudence, and diligence of a prudent professional in consideration of the client’s goals, risk tolerance, and personal circumstances.

Answer 8

Duty of Care

Question 9

Duty to Follow Client Instructions

Answer 9

Comply with client’s instructions, objectives, policies, and restrictions presuming they are reasonable and lawful.

Question 10

Comply with client’s instructions, objectives, policies, and restrictions presuming they are reasonable and lawful.

Answer 10

Duty to Follow Client Instructions

Question 11

Integrity Standard

Answer 11

Do not:

• Make untrue statements of material facts
• Omit a material fact in order to mislead a client or the public
• Encourage any business act that would operate as a fraud or deceit upon anyone

Question 12

Competence Standard

Answer 12

Must:

• Provide professional service with competence
• Recognize any lack of competence and obtain, refer or limit

Question 13

Diligence Standard

Answer 13

• Provide services in a professional manner
• Respond to reasonable client inquiries in timely manner

Question 14

• Provide services in a professional manner
• Respond to reasonable client inquiries in timely manner

Answer 14

Diligence Standard

Question 15

Sound and Objective Judgement

Answer 15

Use professional judgement and refuse all gift’s that could compromise objectivity

Question 16

Use professional judgement and refuse all gift’s that could compromise objectivity

Answer 16

Sound and Objective Judgement

Question 17

Professionalism Standard

Answer 17

Treat others with dignity, courtesy, and respect.

Question 18

Treat others with dignity, courtesy, and respect.

Answer 18

Professionalism Standard

Question 19

Confidentiality Exceptions

Answer 19

Ordinary business purposes given client permission
Within the firm as necessary
to POA
to Auditors
when Subpoenaed
to CFP’s attorneys and accountants as necessary

Question 20

SEC Reg S-P

Answer 20

Must give privacy policy notice

Question 21

How long does CFP have to report charges or convictions?

Answer 21

30 days