CFP EXAM 2026/2027 UPDATE | VERIFIED QUESTIONS & ANSWERS
100% CORRECT | GRADED A+
Code of Ethics - ANSWER 1. Act with honesty, integrity, competence, diligence
2. Act in the clients best interest
3. Exercise due care
4. Avoid or disclose and manage conflicts of interest
5. Maintain confidentiality and protect privacy
6. Act in a manner that reflects positively on the financial planning profession/CFP Board
Standard of Conduct Full List - ANSWER 1. Fiduciary Duty
2. Integrity
3. Competence
4. Diligence
5. Disclose/manage conflicts
6. Sound/Objective professional judgement
7. Professionalism
8. Comply with the law
9. Confidentiality and Privacy
10. Provide Information
15. Refrain from borrowing/lending
Fiduciary Duty: Standard of Conduct - ANSWER - at all times when providing financial advice to a
client, you must act int he best interest of the client
- must fulfill the following duties:
---- Duty of Loyalty = interests of the client above the CFP + Firm
--- Duty of Care = act with care, skill, prudence and diligence
--- Duty to follow clients instructions = comply with engagement and all reasonable/lawful direction
of the client
Competence: Standard of Conduct - ANSWER - must provide relevant knowledge and skill to apply
knowledge
,- if not competent then must gain competence, obtain the assistance of a competent professional,
limit or terminate engagement, and/or refer the client to a competent professional
- must describe any requested service they are not providing
Disclose Conflicts: Standard of Conduct - ANSWER - must make full disclosure of all material conflicts
of interest
- must make full disclosure and obtain consent before providing any financial advice
- written consent is not required, oral disclosure is okay
Manage Conflicts: Standards of Conduct - ANSWER - must adopt and follow business practices
reasonably designed to prevent material conflicts from compromising the ability to act in the clients
best interest
When providing financial advice: Standard of Conduct - ANSWER - advice that does not require
financial planning
- must provide information to the client prior to or at the time of engagement and document the
information
When providing financial planning: Standard of Conduct - ANSWER - must provide the following prior
to or at the time of engagement in one or more written document:
--- terms of engagement
--- scope of engagement
--- service provided
--- clients responsibilities
Duties when representing compensation method: Standard of Conduct - ANSWER - fee only = no
sales related compensation
- fee based = fee and commission, both fees and sales-related compensation
Refrain from borrowing or lending money/commingling financial assets: Standard of Conduct -
ANSWER - may only do so if:
--- client is a family member
--- lender is a business organization
,Practice Standards for the Financial Planning Process - ANSWER 1. Understanding the clients
circumstances
2. Identifying/selecting goals
3. Analyze the current course of action
4. Develop the Financial Planning recommendations
5. Presenting the recommendations
6. Implementing the recommendations
7. Monitoring progress and updating
Net Worth - ANSWER = assets - liabilities
Statement of cash flows - ANSWER = income, dividends - mortgage payments, taxes paid, etc.
Life Cycle Phases - ANSWER - Asset accumulation
- Conservation/protection
- Distribution/giving
Emergency fund equation - ANSWER = cash and cash equivalents / monthly non-discretionary
expenses
Investment Advisor - ANSWER = A B C
= analysis or advice
= Business
= compensation
FDIC - ANSWER = 50% coverage for joint ownership
= IRA up to $250k
= $250k total for cash and cash equivalents
Homeowners Insurance - ANSWER - combination of fire/theft/personal liability insurance
, Named Perils Coverage - ANSWER - coverage provides protection from perils that are specifically
listed in the HO policy
- perils not listed are excluded
Open Perils Coverage - ANSWER - designed to protect against all perils except those specifically
excluded from coverage
Determining the amount of a loss - ANSWER = actual cash value or replacement value
Actual cash value equation - ANSWER = replacement cost - depreciation
- personal property under all forms
Replacement cost - ANSWER - dwellings and other building structures
- generally replacement or repair must occur before the insured can recover from the loss
Amount determined by coinsurance - ANSWER = (amount of insurance/80% of RC) X loss - deductible
HO - 2 - ANSWER - broad form, homeowner
- coverage A-F
- damage to buildings and personal property for loss of use due to damage created by 18 named
perils
HO Coverage A - ANSWER - dwelling coverage
- land is excluded
- coverage for partial loss is on a replacement cost basis if insurance coverage is at least 80% of the
replacement cost of the building
- if less then 80% then insurance company pays actual cash value
- you should recommend coverage for 100% of the cost of the home
HO Coverage B - ANSWER - other structures
- 10% of coverage A
- excludes land/structure used for business/structure rented to not tenant
100% CORRECT | GRADED A+
Code of Ethics - ANSWER 1. Act with honesty, integrity, competence, diligence
2. Act in the clients best interest
3. Exercise due care
4. Avoid or disclose and manage conflicts of interest
5. Maintain confidentiality and protect privacy
6. Act in a manner that reflects positively on the financial planning profession/CFP Board
Standard of Conduct Full List - ANSWER 1. Fiduciary Duty
2. Integrity
3. Competence
4. Diligence
5. Disclose/manage conflicts
6. Sound/Objective professional judgement
7. Professionalism
8. Comply with the law
9. Confidentiality and Privacy
10. Provide Information
15. Refrain from borrowing/lending
Fiduciary Duty: Standard of Conduct - ANSWER - at all times when providing financial advice to a
client, you must act int he best interest of the client
- must fulfill the following duties:
---- Duty of Loyalty = interests of the client above the CFP + Firm
--- Duty of Care = act with care, skill, prudence and diligence
--- Duty to follow clients instructions = comply with engagement and all reasonable/lawful direction
of the client
Competence: Standard of Conduct - ANSWER - must provide relevant knowledge and skill to apply
knowledge
,- if not competent then must gain competence, obtain the assistance of a competent professional,
limit or terminate engagement, and/or refer the client to a competent professional
- must describe any requested service they are not providing
Disclose Conflicts: Standard of Conduct - ANSWER - must make full disclosure of all material conflicts
of interest
- must make full disclosure and obtain consent before providing any financial advice
- written consent is not required, oral disclosure is okay
Manage Conflicts: Standards of Conduct - ANSWER - must adopt and follow business practices
reasonably designed to prevent material conflicts from compromising the ability to act in the clients
best interest
When providing financial advice: Standard of Conduct - ANSWER - advice that does not require
financial planning
- must provide information to the client prior to or at the time of engagement and document the
information
When providing financial planning: Standard of Conduct - ANSWER - must provide the following prior
to or at the time of engagement in one or more written document:
--- terms of engagement
--- scope of engagement
--- service provided
--- clients responsibilities
Duties when representing compensation method: Standard of Conduct - ANSWER - fee only = no
sales related compensation
- fee based = fee and commission, both fees and sales-related compensation
Refrain from borrowing or lending money/commingling financial assets: Standard of Conduct -
ANSWER - may only do so if:
--- client is a family member
--- lender is a business organization
,Practice Standards for the Financial Planning Process - ANSWER 1. Understanding the clients
circumstances
2. Identifying/selecting goals
3. Analyze the current course of action
4. Develop the Financial Planning recommendations
5. Presenting the recommendations
6. Implementing the recommendations
7. Monitoring progress and updating
Net Worth - ANSWER = assets - liabilities
Statement of cash flows - ANSWER = income, dividends - mortgage payments, taxes paid, etc.
Life Cycle Phases - ANSWER - Asset accumulation
- Conservation/protection
- Distribution/giving
Emergency fund equation - ANSWER = cash and cash equivalents / monthly non-discretionary
expenses
Investment Advisor - ANSWER = A B C
= analysis or advice
= Business
= compensation
FDIC - ANSWER = 50% coverage for joint ownership
= IRA up to $250k
= $250k total for cash and cash equivalents
Homeowners Insurance - ANSWER - combination of fire/theft/personal liability insurance
, Named Perils Coverage - ANSWER - coverage provides protection from perils that are specifically
listed in the HO policy
- perils not listed are excluded
Open Perils Coverage - ANSWER - designed to protect against all perils except those specifically
excluded from coverage
Determining the amount of a loss - ANSWER = actual cash value or replacement value
Actual cash value equation - ANSWER = replacement cost - depreciation
- personal property under all forms
Replacement cost - ANSWER - dwellings and other building structures
- generally replacement or repair must occur before the insured can recover from the loss
Amount determined by coinsurance - ANSWER = (amount of insurance/80% of RC) X loss - deductible
HO - 2 - ANSWER - broad form, homeowner
- coverage A-F
- damage to buildings and personal property for loss of use due to damage created by 18 named
perils
HO Coverage A - ANSWER - dwelling coverage
- land is excluded
- coverage for partial loss is on a replacement cost basis if insurance coverage is at least 80% of the
replacement cost of the building
- if less then 80% then insurance company pays actual cash value
- you should recommend coverage for 100% of the cost of the home
HO Coverage B - ANSWER - other structures
- 10% of coverage A
- excludes land/structure used for business/structure rented to not tenant
