ETHICS CE: CFP BOARDS REVISED CODE AND STANDARDS PRESENTED BY BRETT DANKO, LLC APRIL 16, 2019 About Your Instructor Instructor Brett Danko, CFP President, Brett Danko, LLC Brett has worked in the financial services industry for more than 23 years and is a featured nationwide lecturer on matters of personal finance.
Brett has taught CFP Educational Courses and Review Courses for more than 15 years. 2 A Note About Polling CFP Board requires participants to be engaged in the content throughout the session. You will see pop-up polling questions at various points during the
presentation. Please respond to the polling questions as they arise. Results of the polling questions will be shown once everyone has had a chance to answer. 3 Disclaimer The content of this program is based on CFP Boards Code of Ethics and Standards of Conduct (Code and Standards), which is effective on October 1, 2019. CFP Board created and provided this slide deck to the CE Sponsor for presentation. The presenters opinions do not necessarily represent those of CFP Board. All material associated with this program is the property of CFP Board and may not be resold, republished or copied without the prior written consent of CFP Board.
Copyright 2018 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission. 4 Learning Objectives 1. Identify the structure and content of the revised Code and Standards, including significant changes and how the changes affect CFP professionals. 2. Act in accordance with CFP Board's fiduciary duty. 3. Apply the Practice Standards when providing Financial Planning. 4. Recognize situations when specific information must be provided to a Client.
5. Recognize and avoid, or fully disclose and manage, Material Conflicts of Interest. 5 STRUCTURE, CONTENT AND SIGNIFICANT CHANGES LEARNING OBJECTIVE 1 The Revised Code and Standards Significant Changes to Content The New Structure and Organization Duties to:
Clients Firms and Subordinates CFP Board 7 Most Significant Changes to Content 8 The Structure Has Changed Current Standards
Revised Standards (Effective Until September 30, 2019) (Effective October 1, 2019) Introduction Code of Ethics and Professional Responsibility Rules of Conduct Financial Planning Practice Standards Terminology
Preamble Code of Ethics Standards of Conduct Practice Standards for the Financial Planning Process Glossary 9 Code of Ethics A CFP professional must: 1. Act with honesty, integrity, competence, and diligence. 2. Act in the clients 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. 10 Standards of Conduct Six Sections Duties Owed to Clients Financial Planning and Application of Practice
Standards Practice Standards Circumvention Duties Owed to Firms and Subordinates Duties Owed to CFP Board 11
Integrity, Competence, Diligence Integrity Honesty and candor that is not subordinated to personal gain or advantage Standard anti-fraud language Competence Relevant knowledge and skill Gain competence, obtain assistance, limit or terminate engagement, and/or refer the Client Diligence Timely and thorough 12 Objectivity, Professionalism, Communications
Sound and Objective Professional Judgment Exercise professional judgment that is not subordinated. Avoid considerations that could compromise objectivity. Professionalism Treat Clients and others with dignity, courtesy, and respect. Client Communications Provide accurate information in an understandable manner and format. Comply With the Law 13 Confidentiality/Privacy and Technology Confidentiality/Privacy Applies to non-public personal information (NPPI)
Exceptions for ordinary business (four) and legal/enforcement (seven) Cant benefit from NPPI Must protect security and adopt, implement, and share written policies Safe Harbor for Reg S-P (or equivalent) Technology Use reasonable care in selecting, using and recommending Have a reasonable understanding of assumptions and outcomes Have a reasonable basis for believing outcomes will be reliable, objective, and appropriate Refrain from Borrowing, Lending, and Commingling Financial Assets 14 Representation of Compensation Method
Key Terms and Concepts: 15 Fee-Only Application 16 Working With Additional Persons Duties When Engaging or Recommending Develop reasonable basis Disclose compensation arrangements Duties When Engaging Exercise reasonable care
Duties When Working With Additional Persons Communicate about services and responsibilities Inform client if the other provider did not perform or uphold responsibilities 17 Duties Owed to Firms and Subordinates Use Reasonable Care When Supervising Comply with Lawful Objectives of Firm Provide Notice of Public Discipline 18 Duties Owed to CFP Board
Avoid Adverse Conduct Report Incidents of Apparent Adverse Conduct Within Thirty Days Provide a Narrative Statement Cooperate with CFP Board Comply with the Terms and Conditions of Certification and License 19 Quick Review New Structure and Organization Duties to:
Clients Firms and Subordinates CFP Board 20 Apply the New Code & Standard Polling Questions Polling Question 1: The Code and Standards contains new Duties to Clients when Selecting, Using, and Recommending Technology, and when Recommending, Engaging, and Working With Additional Persons. Answer Options: True/ False/ Im guessing
Polling Question 2: A CFP Professional may use the term fee-based to describe his or her compensation method only if the CFP Professional satisfies the standard for being fee-only. Answer Options: True False Im guessing 21 Apply the New Code & Standard Vignette: Working With Others Barb is a CFP professional who is providing financial planning to Chris. Because Chris does not want any of his assets to go to probate when he dies, Barb determines that Chris should establish a living trust for his assets. Chris engages Matt, a prominent trusts and estates attorney referred to him by Barb, to establish the living trust. Barb does not disclose to Chris that she and Matt have a written agreement providing that, if
Barb refers a client to Matt for legal advice, Matt must refer a client to Barb for financial advice. After the living trust is established by Matt, Barb assists Chris in re-registering the assets that she is managing for Chris in the name of the trust. Sadly, Chris dies six months later and his family discovers that the assets Barb was not managing never were placed in the living trust. Apparently, Matt and Barb each believed that the other would re-register the assets, but neither of them did so. As a result, Chriss assets did not avoid probate. 22 Apply the New Code & Standard Vignette: Working With Others Which of the following statements about this scenario are true? 1. Barb complied with the Duties When Recommending, Engaging, and Working with Additional Persons.
2. Barb was not required to disclose to Sally the mutual-referral agreement she had with Matt because Matt offers services at a below-market rate. 3. Barb failed to communicate with Matt and Chris about the scope of their respective services and the allocation of financial responsibility between them. 4. Barb failed to communicate with Matt about the scope of their respective services and the allocation of responsibility between them. 23 Apply the New Code & Standard Vignette: Working With Others Correct Response: 4 is correct. Standard A.13 sets forth Duties When Recommending, Engaging, and Working with Additional Persons. Barb had a reasonable basis for recommending Matt based on Matts reputation, experience, and qualifications. However, Barb had a duty to
disclose her mutual referral relationship to Chris, either prior to the Engagement or at the time of the recommendation, because Barb was receiving a material economic benefit from Matt in exchange for the recommendation. In addition, as a CFP professional, Barb was required to communicate with Matt about the scope of their respective services and the allocation of responsibility between them. By failing to communicate with Matt about who was responsible for placing the assets that Barb was not managing into the living trust, neither of them re-registered the assets, causing the assets to be placed in probate upon Chriss death. C is not correct because the Standard does not require Barb to discuss with Chris, her client, the allocation of responsibilities between Barb and Matt. Further, the rule requires the allocation of responsibilities, not the allocation of financial responsibility. 24 CFP BOARDS FIDUCIARY DUTY
LEARNING OBJECTIVE 2 The Fiduciary Duty Includes a Duty of Loyalty, a Duty of Care, and a Duty to Follow Client Instructions Applies to all Financial Advice to a Client Defines Financial Advice Broadly 26 Fiduciary: Act in the Clients Best Interests Duty of Loyalty Place Clients interests ahead of your own Conflicts: avoid or fully disclose, obtain consent, & properly manage
Act without regard to interests of others Duty of Care Act with care, skill, prudence, and diligence Consider Clients goals, risk tolerance, objectives, and circumstances Duty to Follow Clients Instructions Comply with Terms of Engagement Follow Clients reasonable and lawful directions 27 Applies to All Financial Advice Application At all times when providing Financial Advice to a Client More expansive than when providing Financial Planning
Who is a Client? Any person, including a natural person, business organization or legal entity To whom the CFP professional provides or agrees to provide Professional Services Pursuant to an Engagement 28 Financial Advice Broadly Defined Financial Advice: A. A communication that, based on its content, context, and presentation, would reasonably be viewed as a recommendation that the Client take a particular course of action with respect to:
1. The development or implementation of a financial plan 2. The value of or the advisability of investing in, purchasing, holding, or selling Financial Assets 3. Investment policies or strategies, portfolio composition, or asset management 4. The selection and retention of other persons to provide financial or Professional Services to the Client, or B. The exercise of discretionary authority over Financial Assets. 29 Quick Review Duty of Loyalty Duty of Care
Duty to Follow Client Instructions Fiduciary Duty Applies to All Financial Advice Financial Advice Broadly Defined 30 Apply the New Code & Standard Polling Questions: 1. Under the Code and Standards, whether a CFP Professional has a fiduciary duty depends on whether the CFP Professional is providing Financial Planning. A CFP Professional may provide Financial Advice without owing a Fiduciary Duty. Answer Options: True/ False/ Im guessing
2. In order for there to be Financial Advice, there must be compensation. Answer Options: True/ False/ Im guessing 3. A CFP Professional who provides marketing materials and general financial education materials is Providing Financial Advice. Answer Options: True/ False/ Im guessing 31 Apply the New Code & Standard Vignette: Duty of Care Ray, a CFP professional, asks his new Client, Sue, to complete his firms required account opening forms. Later, Ray notices that Sue completed the forms inconsistently with respect to her risk tolerance. Sue indicated on one form that she cannot tolerate losing 5% of her investment but stated on another form that she has
an aggressive risk tolerance. Rays supervisor learns that Sue selected an aggressive risk tolerance and urges Ray to consider a private placement investment for Sue with potentially large returns but substantial risk. After analysis, Ray determines that the investment would match Sues stated risk tolerance. Ray explains the investment and Sue chooses to purchase the investment. 32 Apply the New Code & Standard Vignette: Duty of Care Which of the following statements about this scenario are true? A.Ray met his duty of care because he solicited information about Sues risk tolerance and recommended an investment to Sue that matched that risk tolerance.
B.Ray violated his duty of care because a prudent CFP professional acting with diligence would have spoken with Sue about the inconsistent risk tolerance information prior to recommending the investment. C. Ray violated his duty of care to Sue because the investment itself is not appropriate for Sue. D. Ray violated his duty of care because a prudent CFP professional would have assumed that with Sues fear of losing 5% of her investment she would want a conservative investment. 33 Apply the New Code & Standard
Vignette: Duty of Care Correct Response: B is correct. Under Standard A.1.b., a prudent CFP professional would have been more diligent in exploring the inconsistent information that Sue provided about her risk tolerance before recommending an investment that matched an aggressive risk tolerance. Ray is unable to determine whether the investment is in Sues best interests until he addresses the apparent inconsistency with Sue and develops a clear understanding of Sues risk tolerance. D is incorrect because Ray should have had a discussion with Sue about the inconsistency in responses and should not assume what she wants. 34 APPLYING THE PRACTICE STANDARDS
LEARNING OBJECTIVE 3 Updated Practice Standards Updated Financial Planning Definition A Revised Standard for Determining Whether the Practice Standards Apply Options When Required to Comply with the Practice Standards but the Client Does Not Want Financial Planning Documentation Updates to Steps in the Financial Planning Process 36
An Updated Financial Planning Definition Current Standards (Effective Until September 30, 2019) Personal financial planning or financial planning denotes the process of determining whether and how an individual can meet life goals through the proper management of financial resources. Financial planning integrates the financial planning process with the financial planning subject areas.
Revised Standards (Effective October 1, 2019) Financial Planning is a collaborative process that helps maximize a Clients potential for meeting life goals through Financial Advice that integrates relevant elements of the Clients personal and financial circumstances. 37
Application of the Practice Standards The Practice Standards Apply When: The CFP professional agrees to provide or provides Financial Planning The CFP professional agrees to provide or provides Financial Advice that requires integration of relevant elements to act in Clients best interests The Client has a reasonable basis to believe the CFP professional will provide or has provided Financial Planning 38 When Integration Is Required
The Integration Factors: Number of relevant elements Portion and amount of the Clients assets affected Length of time the Clients circumstances may be affected Effect on exposure to risk Barriers to modification of Financial Advice 39 CFP Board Evaluation If CFP Board alleges a Practice Standards
violation And the CFP professional denies the allegations Then the CFP professional has the burden of demonstrating that Financial Planning was not required 40 Clients Who Do Not Want Financial Planning If a CFP professional otherwise must comply with the
Practice Standards, but the Client does not agree to engage for Financial Planning, a CFP professional must either: Not enter into the Engagement Limit the scope to services that do not require Financial Planning Provide the requested service but explain the benefits of Financial Planning and limitations on services Terminate the Engagement 41 Documentation Requirement If required to comply with the Practice Standards, a CFP professional must act prudently in documenting information, taking into account:
The significance of the information The need to preserve the information in writing The obligation to act in the Clients best interests and The CFP Professionals Firms policies and procedures 42 Current Practice Standards
New Practice Standards (Effective Until September 30, 2019) (Effective October 1, 2019) 1. Establishing and Defining the Relationship with the Moved to Section A.10: Provide Information to a Client Client 2. Gathering Client Data 1. Understanding the Clients Personal and Financial Circumstances 2. Identifying and Selecting Goals 3. Analyzing and Evaluating the Clients Financial
3. Analyzing the Clients Current Course of Action Status and Potential Alternative Course(s) of Action 4. Developing and Presenting the Financial Planning Recommendations (Identifying and Evaluating Alternatives) 4. Developing and Presenting Financial Planning 4. Developing the Financial Planning Recommendations (Developing Recommendations) Recommendation(s) 4. Developing and Presenting Financial Planning 5. Presenting the Financial Planning Recommendations (Presenting Recommendations) Recommendation(s) 5. Implementing the Financial Planning 6. Implementing the Financial Planning
Recommendations Recommendation(s) 6. Monitoring 7. Monitoring Progress and Updating 43 Steps 1-3: Circumstances, Goals, Options Step 1: Understanding Personal and Financial Circumstances Obtaining Qualitative and Quantitative Information Analyzing Information Addressing Incomplete Information Step 2: Identifying and Selecting Goals Identifying Potential Goals
Selecting and Prioritizing Goals Step 3: Analyzing the Clients Current and Potential Alternative Course(s) of Action Analyzing Current Course of Action Analyzing Potential Alternative Course(s) of Action 44 38 Steps 4-5: Developing and Presenting Step 4: Developing the Financial Planning Recommendation(s) Select recommendation(s) to maximize Client potential for meeting goals For each recommendation, consider:
Assumptions and Estimates Basis for Recommendation Timing/Priority Interdependency of Recommendation Step 5: Presenting the Financial Planning Recommendation(s) Present recommendations Present information considered in developing the recommendation(s) 45 40 Steps 6-7: Implementing and Monitoring
Step 6: Implementing the Financial Planning Recommendation(s) Address implementation responsibilities Identify, analyze and select actions, products and services Recommend actions, products, and services for implementation Select and implement Step 7: Monitoring Progress and Updating Monitoring and updating responsibilities Monitor the Clients progress Obtain current qualitative and quantitative information Update goals, recommendations or implementation decisions 46 Quick Review
Updated Definition - Financial Planning Revised Standard - Determining Whether the Practice Standards Apply Updated Steps - Financial Planning Process 47 Apply the New Code & Standards Polling Questions: 1. If a Client does not want to enter into a Financial Planning Engagement, but a CFP professional believes
that the scope of the work requested requires the CFP professional to comply with the Practice Standards, the CFP professional may limit the scope of the Engagement to services that do not require application of the Practice Standards. Answer Options: True/ False/ Im guessing 2. To understand the Clients Personal and Financial Circumstances, a CFP professional must analyze both quantitative and qualitative information. Answer Options: True/ False/ Im guessing 3. If a Client has a reasonable basis for believing that a CFP professional is providing Financial Planning,
then the CFP professional must comply with the Practice Standards. Answer Options: True/ False/ Im guessing 48 Apply the New Code & Standards Vignette: Practice Standards for the Financial Planning Process Lance, a CFP professional, has an initial meeting with a new prospect, Shelly. After agreeing to prepare a financial plan, Lance gathers information about her personal and financial goals, needs and priorities. Shelly provides some documentation, but says shell need more time to collect additional documents from home. Lance immediately begins reviewing the initial documents and developing recommendations and decides that Shellys goals are outdated. Several weeks later, Lance presents Shelly with a financial plan that makes several
recommendations he believes are in Shellys best interest. 49 Apply the New Code & Standards Vignette: Practice Standards for the Financial Planning Process Which of the following statements about this scenario are true? A. Lance complied with the first three steps of the Practice Standards by gathering Client data and developing recommendations. B. Lance has not complied with the Practice Standards because he failed to: obtain information from Shelly; analyze the information to assess Shellys personal and financial circumstances; and work with Shelly to identify and select goals. Lance also failed to analyze Shellys current course of action prior to recommending an
alternative course of action. C. Lance has complied with the Practice Standards because he developed recommendations that he believes are in Shellys best interests. 50 Apply the New Code & Standards Vignette: Practice Standards for the Financial Planning Process Correct Response: B is correct. The revised Practice Standards for the Financial Planning Process are set forth in Section C of the revised Code and Standards. Under Standards C.1. and C.2., a CFP professional must obtain information concerning the Clients personal and financial circumstances needed to fulfill the Scope of the Engagement, analyze the information to assess the Clients personal and financial circumstances, and then help the Client identify and select goals.
The purpose of this revised process is to understand the Clients personal and financial circumstances before working collaboratively with the Client to identify and select goals. Standard C.3. also requires a CFP professional to analyze a Clients current course of action and then analyze potential alternative courses of action, which Lance did not do in this case. A is incorrect because it reflects the process that was in place under the prior version of the Practice Standards. C is incorrect because Lances belief that his recommendations are in the best interests of Shelly does not mean Lance complied with the Practice Standards. 51 INFORMATION THAT MUST BE PROVIDED TO THE CLIENT LEARNING OBJECTIVE 4
Providing Information to a Client Timing, delivery, and updating requirements Eight categories of information must be provided Additional requirements when providing Financial Planning 53 Timing, Delivery, and Updating Timing: Prior to or at the time of the Engagement Delivery: Financial Advice: No written requirement, but must document Financial Planning: Provide in one or more written documents
Conflicts of Interest: Not required to be provided in writing, but evidence of oral disclosure will be given such weight Updating: Ongoing duty to provide Client with a Material change or update Updates to disciplinary history or bankruptcies within 90 days 54 The Information That Must Be Provided A description of the services and products to be provided How the Client pays for the products and services, and a description of the additional types of costs the Client may incur How the CFP professional, the CFP Professionals Firm, and any Related Party are compensated for providing the products and services Relevant websites that have information about disciplinary actions and bankruptcies
Other information that is Material to a Clients decision to engage or continue to engage Full disclosure of all Material Conflicts of Interest Policies regarding the protection, handling, and sharing of non-public personal information Information required under the Engagement and in response to reasonable Client requests 55 Terms of Engagement When Providing Financial Planning: The Terms of the Engagement include: (a) the Scope of the Engagement and any limitations,
(b) when the services will be provided, and (c) the Clients Responsibilities 56 Quick Review Information provided to Clients Timing, Delivery, and Updating 57 Apply the New Code & Standard Vignette: Provide Information to a Client
Carlos is a CFP professional with no bankruptcy or disciplinary history. Jayla, a prospect, meets with Carlos and hires him for Financial Advice not requiring Financial Planning. Carlos orally discloses all Material Conflicts of Interest. Both sign a written Engagement describing the services and products to be provided, how Jayla pays for them, the additional types of costs Jayla may incur, and how Carlos, his firm, and Related Parties are compensated for providing the products and services. The agreement makes Jayla responsible for implementation, monitoring, and updating. Carlos provides another document describing his firms policies regarding the protection, handling, and sharing of Jaylas non-public personal information. Has Carlos provided the required information to Jayla? 58 Apply the New Code & Standard
Vignette: Provide Information to a Client A. Carlos has provided the required information set forth in the revised Code and Standards. B. Carlos has not provided the required information to Jayla because he cannot say that a Client is responsible for implementation, monitoring, and updating. C. Carlos has not provided the required information to Jayla because the agreement does
not include a written disclosure of all Material Conflicts of Interest. D. Carlos has not provided all required information to Jayla because she failed to provide her with the location of the webpages where any governmental authority, self-regulatory organization, or professional organization that may set forth any public disciplinary history or personal bankruptcy or business bankruptcy where the CFP professional was a Control Person. 59 Apply the New Code & Standard Vignette: Provide Information to a Client Correct Response: A is correct. The agreement includes the information that Standard A.10 of the
revised Code and Standards requires. Because Carlos does not have any bankruptcy or disciplinary history, Carlos is not required to disclose the location of the webpages of all relevant public websites of any governmental authority, self-regulatory organization, or professional organization that sets forth his public disciplinary history or any personal or business bankruptcy with respect to which the CFP professional was a Control Person. B is not correct because the Code and Standards states that a CFP professional is responsible for implementing, monitoring or updating the Financial Planning recommendations unless those services are specifically excluded from the Scope of Engagement. C is not correct because the Code and Standards does not require Conflict of Interest disclosures to be provided in writing. D is not correct because Carlos only would have to provide that information if there is a disclosure set forth on the relevant webpage. Since Carlos does not have a bankruptcy or disciplinary history, he does not need to provide the location of the webpage(s). 60
RECOGNIZE AND AVOID OR DISCLOSE AND MANAGE CONFLICTS LEARNING OBJECTIVE 5 Conflict of Interest Obligations Avoid Material Conflicts of Interest For Material Conflicts that are not avoided: Provide Full Disclosure Obtain Informed Consent Manage the Conflict in the Clients Best Interests 62
Duty to Fully Disclose Material Conflicts Disclosure Obligation: Fully disclose all Material Conflicts of Interest that could affect the professional relationship Conflict of Interest Defined: When interests of CFP professional (and firm) are adverse to the CFP professionals duties to the Client, or When CFP professional has duties to one Client that are adverse to another Client Material: When a reasonable Client or prospective Client would consider the Conflict of Interest important in making a decision 63
Full Disclosure and Informed Consent Disclose Sufficiently Specific Facts Would a reasonable Client understand the conflict and how it could affect the advice? Ambiguity interpreted in favor of the Client Delivery: Written disclosure is not required Oral disclosure weighed as CFP Board deems appropriate Obtain Informed Consent Written consent is not required When will consent be inferred? 64
Must Also Manage Conflicts Management of Conflicts Must adopt and follow business practices reasonably designed to prevent Material Conflicts from compromising the CFP professionals ability to act in the Clients best interests 65 Quick Review
Disclose Material Conflicts of Interest Obtain Informed Consent Manage the Conflicts 66 Apply the New Code & Standard Polling Questions 1. A sincere belief by a CFP professional with a Material Conflict of Interest that he or she is acting in the best interests of the Client is sufficient to excuse the CFP professionals failure to make full disclosure of the Material Conflict of Interest. Answer Options: True/ False/ Im guessing 2. The greater the potential harm a Conflict of Interest presents to the Client, and the more significantly a business
practice that gives rise to the conflict departs from commonly-accepted practices among CFP professionals, the less likely it is that CFP Board will infer informed consent absent clear evidence of informed consent. Answer Options: True/ False/ Im guessing 3. A CFP professional must adopt and follow business practices reasonably designed to prevent Material Conflicts of Interest from compromising the CFP professionals ability to act in the Clients best interests. Answer Options: True/ False/ Im guessing 67 Apply the New Code & Standard Vignette: CFP Professional Volunteer Aisha is a CFP professional who wants to represent Ultra High Net Worth Clients and determines that one hallmark of these Clients is their propensity toward philanthropy. Aisha is a board member of a local community foundation, a large
nonprofit hospital, and her church. Through her various philanthropic roles, Aisha meets several Clients who want her to provide them with financial planning, including assisting them with making choices regarding their philanthropic giving. Depending on the circumstances, Aisha may consider recommending that Clients give to an organization for which she serves as a board member. Is there a Material Conflict of Interest? If yes, how could Aisha manage these conflicts? 68 Apply the New Code & Standard Vignette: CFP Professional Volunteer A. Yes, there is a Material Conflict of Interest. Aisha should disclose her board membership, and notify her Clients of the Conflict of Interest that the membership presents to her when assisting Clients with their philanthropic giving. Aisha also should put into place business practices that
will prevent her work with these organizations from compromising her ability to act in her Clients best interests. B. Yes, there is a Material Conflict of Interest. Aisha should decline to enter into an agreement with prospective Clients and terminate any agreements with existing Clients who intend to make philanthropic gifts. C. No, there is not a Material Conflict of Interest because her board membership will add to the value of the advice Aisha provides to her Clients. 69 Apply the New Code & Standard Vignette: CFP Professional Volunteer
Correct Response: A is correct. Under Standard A.5.a., when providing Financial Advice, a CFP professional must make full disclosure of all Material Conflicts of Interest. Advice regarding charitable giving is Financial Advice here because it is provided as part of the development or implementation of a financial plan. Aisha has a conflict because a reasonable client would view her board membership as affecting the objectivity of her recommendations and thus is important to the Clients decision whether to accept the recommendation. Under Standard A.5.b., the CFP professional must adopt and follow business practices reasonably designed to prevent Material Conflicts of Interest from compromising her ability to act in her Clients best interests. 70 Recommended Resources
Go to www.CFP.net Full version new Code and Standards Commentary on the new Code and Standards 71 Wrap Up Your feedback is very important. Please go to the evaluation link in your e-mail to give us your thoughts about this program. Credits will be reported to CFP Board within 3 business days.
Final Polling Question: Would you recommend this program to a colleague? 72 THANK YOU 73