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1. CFP code of ethics

1. CFP code of ethics. Principle 1 Integrity Principle 2 Objectivity Principle 3 Competence Principle 4 Fairness Principle 5 Confidentiality Principle 6 Professionalism Principle 7 Diligence. (1) Rules that relate to CFP Principle of Integrity

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1. CFP code of ethics

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  1. 1. CFP code of ethics • Principle 1 Integrity • Principle 2 Objectivity • Principle 3 Competence • Principle 4 Fairness • Principle 5 Confidentiality • Principle 6 Professionalism • Principle 7 Diligence

  2. (1) Rules that relate to CFP Principle of Integrity (a) Rule 101. Do not solicit clients through false or misleading communications or advertisements. (b) Rule 102. Do not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. (c) Rule 103. Responsibilities to his or her clients. i. Act in accordance with the authority set forth in the governing legal instrument (e.g., special power of attorney, trust, letters testamentary). ii. Identify and keep complete records of all funds or property of a client. iii. Deliver any funds or property that the client or third party is entitled to receive, and render a full accounting regarding funds or property. iv. Do not commingle client funds or other property with the CFP Board designee’s personal funds or property. Two or more clients’ funds or other property may be commingled, subject to compliance with applicable legal requirements and maintenance of accurate records. v. Show the care required of a fiduciary.

  3. (2) Rules related to CFP Principle of Objectivity (a) Rule 201. Exercise reasonable and prudent professional judgment. (b) Rule 202. Act in the interest of the client. (3) Rules related to CFP Principle of Competence (a) Rule 301. Keep informed of developments in the field of financial planning and participate in continuing education. (b) Rule 302. Offer advice only in those areas in which the CFP Board designee has competence. Otherwise seek the counsel of qualified individuals and/or refer clients to such parties.

  4. (4) Rules related to CFP Principle of Fairness (a) Rule 401. Disclose to the client: i. Material information, such as conflict(s) of interest(s), changes in business affiliation, address, telephone number, credentials, qualifications, licenses, compensation structure, and agency relationships ii. The information required by all laws • e.g. SEC’s Form ADV, Part II

  5. (4) Rules related to CFP Principle of Fairness (b) Rule 402-405. Make timely written disclosure of i. The basic philosophy of CFP designee (or firm) in working with clients ii. Resumes of individuals expected to provide financial planning services to the client and a description of those services iii. Source of compensation and referral fees iv. A statement indicating whether compensation arrangements involve fee only, commission only, or fee and commission. A CFP Board designee cannot hold out as a fee-only financial planning practitioner if he or she receives commissions or other forms of economic benefit from related parties. v. Any material agency or employment relationships with third parties and the fees or commissions resulting from such relationships vi. A statement identifying conflict(s) of interest(s)

  6. (4) Rules related to CFP Principle of Fairness (f) Rule 406. Compensation shall be fair and reasonable. (g) Rule 407. References may be provided that include recommendations from present and/or former clients. (h) Rule 408. Ensure that the scope of authority is clearly defined and properly documented. (i) Rule 409. All CFP Board designees shall adhere to the same standards of disclosure and service. (j) Rule 410. Perform professional services with dedication to the lawful objectives of the employer. (k) Rule 411. i. Advise an employer of outside affiliations that may reasonably compromise service to an employer ii. Provide timely notice to the employer and clients, unless precluded by contractual obligation, in the event of change of employment or CFP Board certification status

  7. (4) Rules related to CFP Principle of Fairness (l) Rule 412. A CFP designee must act in good faith with partners. (m) Rule 413. A CFP Board designee must disclose to partners all relevant and material information regarding credentials, competence, experience, licensing and/or legal status, and financial stability. (n) Rule 414. A CFP Board designee who is a partner or co-owner of a financial services firm must withdraw in compliance with any applicable agreement and in a fair and equitable manner (o) Rule 415. A CFP Board designee must disclose to an employer any compensation or other benefit arrangements in connection with his or her services to clients are in addition to compensation from the employer. (p) Rule 416. Any business transaction with a client shall be on terms that are fair and reasonable to the client.

  8. (5) Rules about CFP Principle of Confidentiality (a) Rule 501. Do not reveal, without the client’s consent, any personally identifiable information relating to the client relationship, except when use is reasonably necessary: i. To establish an advisory or brokerage account, to effect a transaction for the client, or as otherwise impliedly authorized in order to carry out the client engagement ii. To comply with legal requirements or legal process iii. To defend the CFP Board designee against charges of wrongdoing iv. In connection with a civil dispute between the CFP Board designee and the client (b) Rule 502. Maintain the same standards of confidentiality to employers as to clients. (c) Rule 503. Adhere to reasonable expectations of confidentiality while in business and thereafter.

  9. 6) Rules about CFP Principle of Professionalism (a) Rule 601. Use the marks in compliance with the rules and regulations of CFP Board (see Topic 2, Section 1.A.(1)). (b) Rule 602. Show respect for other financial planning professionals and related occupational groups by engaging in fair and honorable competitive practices. (c) Rule 603. Inform the CFP Board when another CFP Board designee has committed a violation of the Code of Ethics and there is no substantial doubt. (d) Rule 604. Inform regulatory and/or professional disciplinary body when there is unprofessional, fraudulent, or illegal conduct by another professional and there is no substantial doubt. (e) Rule 605. Disclose illegal conduct to the immediate supervisor and/or partners. If appropriate measures are not taken to remedy the situation, alert the appropriate regulatory authorities, including the CFP Board, in a timely manner.

  10. 6) Rules about CFP Principle of Professionalism (f) Rule 606. In all professional activities, a CFP Board designee shall perform services in accordance with i. Applicable laws, rules, and regulations of governmental agencies and other applicable authorities ii. Applicable rules, regulations, and policies of the CFP Board (g) Rule 607. Do not engage in any conduct that reflects adversely on the profession. (h) Rule 608. Disclose to clients the firm’s status as registered investment advisers. It is proper to use the term registered investment adviser if the CFP designee is registered individually. If the CFP designee is registered through his or her firm, then the firm is the registered investment adviser. (i) Rule 609. Must not practice any other profession or offer to provide such services unless the CFP designee is qualified to practice in those fields and is licensed as required by state law.

  11. 6) Rules about CFP Principle of Professionalism (j) Rule 610. Return the client’s original records in a timely manner upon request of the client. (k) Rule 611. Do not bring or threaten to bring a disciplinary proceeding under this Code of Ethics or report or threaten to report information to CFP Board pursuant to Rules 603 and/or 604 for no substantial purpose other than to harass, embarrass, and/or unfairly burden another CFP Board designee. (l) Rule 612. Comply with all applicable renewal requirements established by CFP Board.

  12. (7) Rules that relate to the Principle of Diligence (a) Rule 701. Provide services diligently. (b) Rule 702. Enter into an engagement only after securing sufficient information to satisfy the CFP designee that i. Relationship is warranted by individual’s needs and objectives. ii. The CFP Board designee has the ability to either provide requisite competent services or to involve other professionals who can provide such services. (c) Rule 703. Implement only recommendations that are suitable for the client. (d) Rule 704. Make a reasonable investigation regarding the financial products recommended to clients. (e) Rule 705. Supervise subordinates with regard to their delivery of financial planning services.

  13. 2. CFP Disciplinary Rules and Procedures A. Board of Professional Review (1) Is charged with the duty of investigating, reviewing, and taking appropriate action with respect to alleged violations of the Code of Ethics and alleged noncompliance with the Financial Planning Practice Standards (2) Can divide into 2 panels (A) Inquiry Panel and a (B) Hearing Panel and designate a chair for each panel. No cross membership on the same matter. Can dismiss allegations as being without merit, dismiss allegations with a letter of caution recommending remedial action and entering other appropriate orders, or refer the matter to CFP Board for preparation and processing of a complaint against the CFP Board designee

  14. 2. CFP Disciplinary Rules and Procedures (3) All answers to complaints shall be in writingwithin 20 calendar days from the date of service of the complaint upon the CFP Board designee, otherwise allegations deemed admitted. (3) Appeals must be made within 30 calendar days after notice of the order is sent to the CFP designee, or such order shall be final. D. Staff counsel—maintains a central office

  15. 2. CFP Disciplinary Rules and Procedures E. Grounds for discipline (1) Any act or omission that violates the provisions of the Code of Ethics (2) Any act or omission that fails to comply with the Practice Standards (3) Any act or omission that violates the criminal laws of any state or of the United States or of any province, territory, or jurisdiction of any other country (4) Any act that is the proper basis for professional suspension (5) Failure to respond to a request by the Board, without good cause shown (6) Any false or misleading statement made to CFP Board

  16. 2. CFP Disciplinary Rules and Procedures F. Forms of discipline (1) No action. ..dismiss for no grounds for discipline or with a cautionary letter. (2) Require to complete additional continuing education or other remedial work. (3) Private censure. (i.e., an unpublished written reproach mailed by the Board to a censured CFP Board designee). (4) Public Letter of Admonition. (5) Suspension. for a specified period of time, not to exceed five years, may qualify for reinstatement to use the marks. (6) Revocation. The Board may order permanent revocation of a CFP Board designee’s right to use the marks.

  17. TOPIC 3: CFP BOARD’S 10 FINANCIAL PLANNING PRACTICE STANDARDS (do not require providing comprehensive planning for clients.) 2. Content of each series A. Establishing and defining the relationship with the client 100-1. Define scope of engagement before any service is provided B. Gathering client data (1) 200-1. Determining a client’s personal and financial goals, needs, and priorities before any recommendation is made and/or implemented (2) 200-2. Obtaining quantitative information and documents before any recommendation is made and/or implemented. If not obtained, restrict the scope of the engagement or terminate the engagement.

  18. TOPIC 3: CFP BOARD’S 10 FINANCIAL PLANNING PRACTICE STANDARDS 2. Content of each series C. Analyzing and evaluating the client’s financial status, resources and current course of action D. Developing and presenting the financial planning recommendation(s) (1) The 400 Series represents the very heart of the financial planning process. (2) 400-1. Identifying and evaluating financial planning alternative(s) to reasonably meet the client’s goals, needs, and priorities (3) 400-2. Developing the financial planning recommendation(s) from among the selected alternatives (4) 400-3. Presenting the financial planning recommendation(s) to the client

  19. TOPIC 3: CFP BOARD’S 10 FINANCIAL PLANNING PRACTICE STANDARDS 2. Content of each series E. Implementing the financial planning recommendation(s) (1) 500-1. Agreeing on implementation responsibilities (2) 500-2. Selecting products and services for implementation F. Monitoring 600-1. Mutually defining monitoring responsibilities • 3. Enforcing through disciplinary rules and procedures • A. The practice of financial planning consistent with these Practice Standards is required for • CFP Board designees. • B. Enforcement is based on the disciplinary rules and procedures established by CFP Board • and administered by CFP Board’s Board of Professional Review and Board of Appeals.

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