CFP – Certified Financial Planner
Q: What is the highest ethical duty a CFP® professional owes to a client?
ANSWER Fiduciary duty.
Q: What does the Duty of Loyalty require? ANSWER Placing the client's
interests above the CFP® professional’s own interests.
Q: What does the Duty of Care require? ANSWER Acting with the
competence, skill, and diligence a prudent professional would exercise.
Q: When must a CFP® act as a fiduciary? ANSWER When providing Financial
Advice.
Q: What is "Financial Advice" under the CFP Board standards? ANSWER A
communication that, based on its context, reasonably would be viewed as a
recommendation.
Q: Does a CFP® owe a fiduciary duty when providing general education or
factual information? ANSWER No.
Q: What is a Material Conflict of Interest? ANSWER A conflict that a
reasonable client would expect to materially affect the CFP® professional’s
objectivity.
Q: How must a CFP® handle a material conflict of interest? ANSWER Obtain
informed consent from the client.
Q: What does "Informed Consent" require? ANSWER The client must
understand the material facts, including the nature of the conflict and how it
impacts the advice.
,Q: What is the Duty of Client First? ANSWER Acting in the best interest of the
client at all times when providing financial advice.
Q: Can a CFP® receive compensation from a third party (like a product
commission) while acting as a fiduciary? ANSWER Yes, but only if fully
disclosed and with the client's informed consent.
Q: What is the standard for disclosing conflicts under the CFP Code of Ethics?
ANSWER Timely, plain-language, meaningful disclosure.
Q: What is the Duty to Follow Client Instructions? ANSWER A CFP® must
comply with reasonable and lawful instructions of the client.
Q: When can a CFP® refuse to follow client instructions? ANSWER If the
instructions are illegal, unethical, or would require the CFP® to violate the
Code of Ethics.
Q: What is the Duty of Confidentiality? ANSWER Protecting client information
unless the client gives informed consent to disclose.
Q: What are the exceptions to the Duty of Confidentiality? ANSWER Required
by law, to defend against charges of wrongdoing by the CFP®, or to protect the
CFP® or public against imminent harm.
Q: What is the Duty of Diligence? ANSWER Providing services in a reasonably
prompt and thorough manner.
Q: What is the Duty of Competence? ANSWER Only providing services that
the CFP® is competent to perform or has properly supervised.
Q: What does the CFP Board’s "Practice Standards" require regarding the basis
for recommendations? ANSWER Recommendations must be based on
reasonable professional judgment.
Q: What is the first step in the financial planning process according to CFP
standards? ANSWER Understanding the client’s personal and financial
circumstances.
Q: What is the final step in the financial planning process? ANSWER
Monitoring progress and updating.
Q: Under CFP Board rules, what constitutes "misconduct"? ANSWER Any
violation of the Code of Ethics or Standards of Conduct.
, Q: What is the difference between a CFP® professional and a CFP® certificant?
ANSWER "Professional" implies currently providing financial advice or
supervision; "certificant" holds the mark but may not be actively practicing.
Q: Can a CFP® use the marks if their certification is suspended? ANSWER No.
Q: What is the requirement for continuing education (CE) for CFP®
professionals? ANSWER 30 hours every two years, including 2 hours of CFP
Board ethics CE.
Q: What is the penalty for a CFP® failing to meet the CE requirement?
ANSWER Suspension of the right to use the CFP® marks.
Q: Who has jurisdiction to discipline a CFP® professional? ANSWER The CFP
Board.
Q: What is the standard of care for a CFP® who is not providing financial advice
(e.g., purely administrative tasks)? ANSWER They must still act with honesty
and integrity, but the full fiduciary duty does not apply.
Q: What is a "Supervised CFP®"? ANSWER A CFP® professional whose financial
advice activities are subject to oversight by a supervisor.
Q: Is a supervisor liable for a supervised CFP®'s ethical violations? ANSWER
Yes, if the supervisor knew or should have known of the conduct and failed to
take reasonable steps to prevent it.
Q: What is the Duty to Avoid or Disclose and Manage Conflicts? ANSWER A
CFP® must avoid conflicts, but if unavoidable, must fully disclose and manage
them.
Q: Can a CFP® designate a third party to make decisions on behalf of a client?
ANSWER Only with proper legal authority (e.g., Power of Attorney) and client
consent.
Q: What is the CFP Board's stance on providing tax advice? ANSWER A CFP®
must comply with the IRS Circular 230 requirements when preparing tax
returns or giving tax advice.
Q: What does "solely incidental" mean regarding tax advice? ANSWER The tax
advice is a minor component of the overall financial advice and not the primary
purpose of the engagement.
Q: What is the highest ethical duty a CFP® professional owes to a client?
ANSWER Fiduciary duty.
Q: What does the Duty of Loyalty require? ANSWER Placing the client's
interests above the CFP® professional’s own interests.
Q: What does the Duty of Care require? ANSWER Acting with the
competence, skill, and diligence a prudent professional would exercise.
Q: When must a CFP® act as a fiduciary? ANSWER When providing Financial
Advice.
Q: What is "Financial Advice" under the CFP Board standards? ANSWER A
communication that, based on its context, reasonably would be viewed as a
recommendation.
Q: Does a CFP® owe a fiduciary duty when providing general education or
factual information? ANSWER No.
Q: What is a Material Conflict of Interest? ANSWER A conflict that a
reasonable client would expect to materially affect the CFP® professional’s
objectivity.
Q: How must a CFP® handle a material conflict of interest? ANSWER Obtain
informed consent from the client.
Q: What does "Informed Consent" require? ANSWER The client must
understand the material facts, including the nature of the conflict and how it
impacts the advice.
,Q: What is the Duty of Client First? ANSWER Acting in the best interest of the
client at all times when providing financial advice.
Q: Can a CFP® receive compensation from a third party (like a product
commission) while acting as a fiduciary? ANSWER Yes, but only if fully
disclosed and with the client's informed consent.
Q: What is the standard for disclosing conflicts under the CFP Code of Ethics?
ANSWER Timely, plain-language, meaningful disclosure.
Q: What is the Duty to Follow Client Instructions? ANSWER A CFP® must
comply with reasonable and lawful instructions of the client.
Q: When can a CFP® refuse to follow client instructions? ANSWER If the
instructions are illegal, unethical, or would require the CFP® to violate the
Code of Ethics.
Q: What is the Duty of Confidentiality? ANSWER Protecting client information
unless the client gives informed consent to disclose.
Q: What are the exceptions to the Duty of Confidentiality? ANSWER Required
by law, to defend against charges of wrongdoing by the CFP®, or to protect the
CFP® or public against imminent harm.
Q: What is the Duty of Diligence? ANSWER Providing services in a reasonably
prompt and thorough manner.
Q: What is the Duty of Competence? ANSWER Only providing services that
the CFP® is competent to perform or has properly supervised.
Q: What does the CFP Board’s "Practice Standards" require regarding the basis
for recommendations? ANSWER Recommendations must be based on
reasonable professional judgment.
Q: What is the first step in the financial planning process according to CFP
standards? ANSWER Understanding the client’s personal and financial
circumstances.
Q: What is the final step in the financial planning process? ANSWER
Monitoring progress and updating.
Q: Under CFP Board rules, what constitutes "misconduct"? ANSWER Any
violation of the Code of Ethics or Standards of Conduct.
, Q: What is the difference between a CFP® professional and a CFP® certificant?
ANSWER "Professional" implies currently providing financial advice or
supervision; "certificant" holds the mark but may not be actively practicing.
Q: Can a CFP® use the marks if their certification is suspended? ANSWER No.
Q: What is the requirement for continuing education (CE) for CFP®
professionals? ANSWER 30 hours every two years, including 2 hours of CFP
Board ethics CE.
Q: What is the penalty for a CFP® failing to meet the CE requirement?
ANSWER Suspension of the right to use the CFP® marks.
Q: Who has jurisdiction to discipline a CFP® professional? ANSWER The CFP
Board.
Q: What is the standard of care for a CFP® who is not providing financial advice
(e.g., purely administrative tasks)? ANSWER They must still act with honesty
and integrity, but the full fiduciary duty does not apply.
Q: What is a "Supervised CFP®"? ANSWER A CFP® professional whose financial
advice activities are subject to oversight by a supervisor.
Q: Is a supervisor liable for a supervised CFP®'s ethical violations? ANSWER
Yes, if the supervisor knew or should have known of the conduct and failed to
take reasonable steps to prevent it.
Q: What is the Duty to Avoid or Disclose and Manage Conflicts? ANSWER A
CFP® must avoid conflicts, but if unavoidable, must fully disclose and manage
them.
Q: Can a CFP® designate a third party to make decisions on behalf of a client?
ANSWER Only with proper legal authority (e.g., Power of Attorney) and client
consent.
Q: What is the CFP Board's stance on providing tax advice? ANSWER A CFP®
must comply with the IRS Circular 230 requirements when preparing tax
returns or giving tax advice.
Q: What does "solely incidental" mean regarding tax advice? ANSWER The tax
advice is a minor component of the overall financial advice and not the primary
purpose of the engagement.
