Code of Ethics & Standards of Professional Conduct

What are the Steps of the "financial planning process"?

"Personal financial planning process" or "financial planning process" denotes the process which typically includes, but is not limited to, some or all of these six steps: 1. Establishing and defining the client-planner relationship, 2. Gathering client data including goals, 3. Analyzing and evaluating the client's current financial status, 4. Developing and presenting recommendations and/or alternatives 5. Implementing the recommendations, and 6. Monitoring the recommendations

What factors must be considered when determining whether the material elements of financial planning are being provided to a client?

"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. In determining whether the certificant is providing financial planning or material elements of financial planning, factors that may be considered include, but are not limited to: The client's understanding and intent in engaging the certificant. The degree to which multiple financial planning subject areas are involved. The comprehensiveness of data gathering. The breadth and depth of recommendations. Financial planning may occur even if the material elements are not provided to a client simultaneously, are delivered over a period of time, or are delivered as distinct subject areas. It is not necessary to provide a written financial plan to engage in financial planning.

What is the definition of "professional eligible for reinstatement (PER)?

"Professional Eligible for Reinstatement" (PER) denotes an individual who is not currently certified but has been certified by CFP Board in the past and has an entitlement, direct or indirect, to use the CFP® marks. This includes individuals who have relinquished their certification and who are eligible for reinstatement without being required to pass the current CFP® Certification Examination. The Standards of Professional Conduct apply to PERs when the conduct at issue occurred at a time when the PER was certified; CFP Board has jurisdiction to investigate such conduct.

What is the purpose of the practice standards?

- Assure that the practice of financial planning by CERTIFIED FINANCIAL PLANNER™ professionals is based on established norms of practice; - Advance professionalism in financial planning; - Enhance the value of the financial planning process.

Understanding the Client's Personal and Financial Circumstances: Analyzing Information

A CFP® Professional must analyze the qualitative and quantitative information to assess the clients personal and financial circumstances.

Identifying and Selecting Goals: Identifying Potential Goals

A CFP® Professional must discuss with the client their assessment of the clients financial and personal circumstance and help the client identify goals, nothing the effect that selecting a particular goal may have on other goals. In helping the client identify goals, the CFP® Professional must discuss with the client, and apply, reasonable assumptions and estimates. These may include life expectancy, inflation rates, tax rates, investment returns, and other material assumptions and estimates.

Analyzing the client's current course of action and potential alternative course(s) of action: Analyzing the current course of action

A CFP® must analyze the clients current course of action, including the material advantages and disadvantages of the current course and whether the current course maximizes the potential for meeting the client's goals.

Monitoring progress and updating: Obtaining current qualitative and quantitative information

A CFP® must collaborate with the client in an attempt to obtain current qualitative and quantitative information concerning the clients personal and financial circumstances.

Implementing the Financial Planning recommendation(s): Selecting and implementing actions, products, or services

A CFP® must discuss with the client any client selections that deviates from the actions, products, and services for the CFP® recommended.

Implementing the Financial Planning recommendation(s): Addressing implementation responsibilities

A CFP® must establish with the client whether the CFP® has implementation responsibilities. When the CFP® has implementation responsibilities, the CFP® must communicate to the client to the recommendation(s) being implemented and the responsibilities of the CFP®, the client and any third party with respect to implementation.

Monitoring progress and updating: Monitoring and updating responsibilities

A CFP® must establish with the client whether the CFP® has monitoring and updating responsibilities. The CFP® must communicate with the client the following: 1. Which actions, products, and services are and are not subject to the CFP®'s monitoring responsibility; 2. How and when the CFP® will monitor the actions, products and services; 3. The client's responsibility to inform the CFP® of any material changes to the client's qualitative and quantitative info; 4. The CFP®'s responsibility to update the financial planning recommendations 5. How and when the CFP® will update the financial planning recommendations

Presenting the Financial planning Recommendation(s)

A CFP® must present to the client the selected recommendations and the information that was required to be considered when developing the recommendation(s).

Understanding the Client's Personal and Financial Circumstances: Obtaining Qualitative and Quantitative information

A CFP® professional must describe to the client the qualitative and quantitative information concerning the client's personal and professional circumstances needed to fulfill the Scope of Engagement and collaborate with the client to obtain the information.

Identifying and Selecting Goals: Select and Prioritize Goals

A CFP® professional must help the client select and prioritize goals. The CFP® professional must discuss with the client any goals the client has selected that the CFF® believes are not realistic.

Implementing the Financial Planning recommendation(s): Identifying, analyzing, and selecting actions, products and services

A CFP® who has implementation responsibilities must identify and analyze actions, products, and services designed to implement the recommendations.

Monitoring progress and updating: Monitoring the client's progress

A CFP® who has monitoring responsibilities must analyze, at appropriate intervals, the progress toward achieving the client's goals. The CFP® must review with the client the results of the CFP®'s analysis.

When can a planner describe his practice as "fee only"?

A certificant may describe his or her practice as "fee-only" if, and only if, all of the certificant's compensation from all of his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage or performance-based fees.

What must a certificant do if the CFP mark is suspended or revoked? Rule 4.7

A certificant shall advise his or her current clients of any certification suspension or revocation he or she receives from CFP Board

What "duty of care" is owed to the client?

A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of financial planning, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board.

What must be disclosed to a client? Rule 2.2

A certificant shall disclose to a prospective client or client the following information: An accurate and understandable description of the compensation arrangements being offered.

What is the standard of judgement that must be exercised in providing services? Rule 4.4

A certificant shall exercise reasonable and prudent professional judgment in providing professional services to clients.

What are the exceptions to the general rule that certificants cannot borrow money from a client? Rule 3.6

A certificant shall not borrow money from a client. Exceptions to this Rule include: The client is a member of the certificant's immediate family, or The client is an institution in the business of lending money and the borrowing is unrelated to the professional services performed by the certificant.

When can a certificant commingle client property with OTHER client property? 3.9

A certificant shall not commingle a client's property with other clients' property unless the commingling is permitted by law or the certificant has both explicit written authorization to do so from each client involved and sufficient record-keeping to track each client's assets accurately.

When can a certificant commingle client property with the certificant's property? Rule 3.8

A certificant shall not commingle a client's property with the property of the certificant or the certificant's employer, unless the commingling is permitted by law or is explicitly authorized and defined in a written agreement between the parties.

Give examples of how a planner might violate requirements of disclosure? Rule 2.1

A certificant shall not communicate, directly or indirectly, to clients or prospective clients any false or misleading information directly or indirectly related to the certificant's professional qualifications or services. A certificant shall not mislead any parties about the potential benefits of the certificant's service. A certificant shall not fail to disclose or otherwise omit facts where that disclosure is necessary to avoid misleading clients.

What are the exceptions to the general rule that certificants cannot lend money to a client? Rule 3.7

A certificant shall not lend money to a client. Exceptions to this Rule include: The client is a member of the certificant's immediate family, or The certificant is an employee of an institution in the business of lending money and the money lent is that of the institution, not the certificant

How long does a certificant have to notify CFP board to update contact information?

A certificant shall notify CFP Board of changes to contact information, including, but not limited to, e-mail address, telephone number(s) and physical address, within (45) days

What must be if the certificant cannot obtain all information necessary to fulfill the planning obligation? Rule 3.3

A certificant shall obtain the information necessary to fulfill his or her obligations. If a certificant cannot obtain the necessary information, the certificant shall inform the prospective client or client of any and all material deficiencies.

What qualifies a certificant to "offer advice"? Rule 4.2

A certificant shall offer advice only in those areas in which he or she is competent to do so and shall maintain competence in all areas in which he or she is engaged to provide professional services.

What must the certificant do if a subordinate or third party is assigned responsibility? Rule 4.6

A certificant shall provide reasonable and prudent professional supervision or direction to any subordinate or third party to whom the certificant assigns responsibility for any client services.

When must a clients property be returned to the client? Rule 3.10

A certificant shall return a client's property to the client upon request as soon as practicable or consistent with a time frame specified in an agreement with the client.

What must be done to protect the client information and property? Rule 3.2

A certificant shall take prudent steps to protect the security of information and property, including the security of stored information, whether physically or electronically, that is within the certificant's control.

What are the exceptions to confidentiality requirement? Rule 3.1

A certificant shall treat information as confidential except as required in response to proper legal process; as necessitated by obligations to a certificant's employer or partners; as required to defend against charges of wrongdoing; in connection with a civil dispute; or as needed to perform the services

When does a "conflict of interest" exist?

A conflict exists when a certificant's financial, business, property and/or personal interests, relationships or circumstances reasonably may impair his/her ability to offer objective advice, recommendations or services

Give examples of conflicts of interest that must be disclosed?

A general summary of likely conflicts of interest between the client and the certificant, the certificant's employer or any affiliates or third parties, including, but not limited to, information about any familial, contractual or agency relationship of the certificant or the certificant's employer that has a potential to materially affect the relationship.

What does the process of evaluating possible alternatives involve?

After analyzing the client's current situation (Practice Standard 300-1) and prior to developing and presenting the recommendation(s) (Practice Standards 400-2 and 400-3) the financial planning practitioner shall identify alternative actions. The practitioner shall evaluate the effectiveness of such actions in reasonably meeting the client's goals, needs and priorities. This evaluation may involve, but is not limited to, considering multiple assumptions, conducting research or consulting with other professionals. This process may result in a single alternative, multiple alternatives or no alternative to the client's current course of action. In considering alternative actions, the practitioner shall recognize and, as appropriate, take into account his or her legal and/or regulatory limitations and level of competency in properly addressing each of the client's financial planning issues. More than one alternative may reasonably meet the client's goals, needs and priorities. Alternatives identified by the practitioner may differ from those of other practitioners or advisers, illustrating the subjective nature of exercising professional judgment.

How long does a certificant have to answer a complain?

All Answers to Complaints shall be in writing. The Answer shall be submitted within 20 calendar days from the date of service of the Complaint on the Respondent. The Respondent shall file an original of such Answer with CFP Board. A copy of the Answer shall be included with the materials provided to the Hearing Panel in advance of the hearing. In the Answer, the Respondent shall respond to every material allegation contained in the Complaint. In addition, the Respondent shall set forth in the Answer any defenses or mitigating circumstances

How long does the certificant have to respond to an "order to show cause"?

All responses to Orders to Show Cause shall be in writing and shall be submitted within 20 calendar days from the date of service of the Order to Show Cause upon the CFP® professional. Extensions and/or continuances are generally disfavored by CFP Board. CFP Board Counsel may, however, grant reasonable requests for extensions and continuances, as deemed appropriate. The CFP® professional shall, in the response, either request or waive the right to participate in the Show Cause Hearing.

What is an "order to show cause"?

Although a CFP® professional's right to use the marks shall not ordinarily be suspended during the pendency of such proceedings, when CFP Board receives evidence that a CFP® professional has engaged in conduct: 1) that poses an immediate threat to the public; and 2) the gravity of the conduct significantly impinges upon the stature and reputation of the marks, CFP Board Counsel may issue an Order to Show Cause why the CFP® professional's right to use the marks should not be suspended during the pendency of the proceedings.

In disclosing compensation, what must be provided to the client?

An accurate and understandable description of the compensation arrangements being offered. This description must include: Information related to costs and compensation to the certificant and/or the certificant's employer, and Terms under which the certificant and/or the certificant's employer may receive any other sources of compensation, and if so, what the sources of these payments are and on what they are based

What may be needed after analysis and evaluation of the clients situation?

Analysis and evaluation are critical to the financial planning process. These activities form the foundation for determining strengths and weaknesses of the client's financial situation and current course of action. These activities may also identify other issues that should be addressed. As a result, it may be appropriate to amend the scope of the engagement and/or to obtain additional information.

What is required for the scope of an engagement to change?

As the relationship proceeds, the scope may change by mutual agreement. This Practice Standard shall not be considered alone, but in conjunction with all other Practice Standards

Function and Jurisdiction of the DEC

CFP Board's Disciplinary and Ethics Commission (referred to herein as "the DEC"), formed pursuant to and governed by the bylaws of CFP Board, is charged with the duty of reviewing and taking appropriate action with respect to alleged violations of the Code of Ethics and Rules of Conduct, alleged non-compliance with the Practice Standards and conduct reviewed pursuant to the Fitness Standards. The DEC shall have original jurisdiction over all such matters as defined in the DEC Charter.

What are the ONLY acceptable ways to use the CFP mark?

CFP®, CERTIFIED FINANCIAL PLANNER ™

Code of Ethics: Principle 3- Competence

Competence: Maintain the knowledge and skill necessary to provide professional services competently. Competence means attaining and maintaining an adequate level of knowledge and skill, and application of that knowledge and skill in providing services to clients. Competence also includes the wisdom to recognize the limitations of that knowledge and when consultation with other professionals is appropriate or referral to other professionals necessary. Certificants make a continuing commitment to learning and professional improvement.

Code of Ethics: Principle 5- Confidentiality

Confidentiality: Protect the confidentiality of all client information. Confidentiality means ensuring that information is accessible only to those authorized to have access. A relationship of trust and confidence with the client can only be built upon the understanding that the client's information will remain confidential.

What is the definition of a client?

Denotes a person, persons, or entity who engages a certificant and for whom professional services are rendered. Where the services of the certificant are provided to an entity (corporation, trust, partnership, estate, etc.), the client is the entity acting through its legally authorized representative

Code of Ethics: Principle 7- Diligence

Diligence: Provide professional services diligently. Diligence is the provision of services in a reasonably prompt and thorough manner, including the proper planning for, and supervision of, the rendering of professional services.

What is the definition of a serious crime?

Every Respondent: (1) upon being convicted of a crime, other than minor traffic offenses; (2) upon being the subject of professional discipline; or (3) upon notification of a change to a matter previously disclosed under items (1) and (2) to CFP Board, shall notify CFP Board in writing of such conviction or professional discipline within 30 calendar days after the date on which the Respondent is notified of the conviction or professional discipline.

Code of Ethics: Principle 4-Fairness

Fairness: Be fair and reasonable in all professional relationships. Disclose conflicts of interest. Fairness requires impartiality, intellectual honesty and disclosure of material conflicts of interest. It involves a subordination of one's own feelings, prejudices and desires so as to achieve a proper balance of conflicting interests. Fairness is treating others in the same fashion that you would want to be treated.

Developing the Financial planning recommendation(s):

From the potential courses of action, a CFP® must select one or more recommendations designated to maximize the potential for meeting the client's goals. The recommendations may be to continue to the client's course of action. For each recommendation selected, the CFP® must consider the following information: A. The assumptions and estimates used to develop the recommendation. B. The basis for making the recommendation, including how the recommendation is designed to maximize the potential to meet the client's goals, the anticipated material effects of the recommendation on the client's financial and personal circumstances, and how the recommendation integrates relevant elements of the client's personal and financial circumstances. C. The timing and priority of the recommendation, and; D. Whether the recommendation is independent or must be implemented with another recommendation.

What is the role of the practitioner in the goal setting process?

Goals and objectives provide focus, purpose, vision and direction for the financial planning process. It is important to determine clear, and measurable objectives that are relevant to the scope of the engagement. The role of the practitioner is to facilitate the goal-setting process in order to clarify, with the client, goals and objectives. When appropriate, the practitioner shall try to assist clients in recognizing the implications of unrealistic goals and objectives.

When engaging in the financial planning process, what information must be disclosed either in writing or verbally? Rule 1.2

If the certificant's services include financial planning or material elements of financial planning, prior to entering into an agreement, the certificant shall provide written information or discuss with the prospective client or client the following: * The obligations and responsibilities of each party under the agreement with respect to: * Defining goals, needs and objectives, * Gathering and providing appropriate data, * Examining the result of the current course of action without changes, * The formulation of any recommended actions, * Implementation responsibilities, and * Monitoring responsibilities. Compensation that any party to the agreement or any legal affiliate to a party to the agreement will or could receive under the terms of the agreement; and factors or terms that determine costs, how decisions benefit the certificant and the relative benefit to the certificant. * Terms under which the agreement permits the certificant to offer proprietary products. * Terms under which the certificant will use other entities to meet any of the agreement's obligations. If the certificant provides the above information in writing, the certificant shall encourage the prospective client or client to review the information and offer to answer any questions that the prospective client or client may have.

What must the practitioner do if unable to obtain sufficient information upon which to case recommendations?

If the practitioner is unable to obtain sufficient and relevant quantitative information and documents to form a basis for recommendations, the practitioner shall either: Restrict the scope of the engagement to those matters for which sufficient and relevant information is available; or Terminate the engagement.

When engaging in the financial planning process, what information must be disclosed in writing? Rule 1.3

If the services include financial planning or material elements of financial planning, the certificant or the certificant's employer shall enter into a written agreement governing the financial planning services ("Agreement"). The Agreement shall specify: * The parties to the Agreement * The date of the Agreement and its duration * How and on what terms each party can terminate the Agreement * The services to be provided as part of the Agreement The Agreement may consist of multiple written documents. Written documentation that includes the items above and is used by a certificant or certificant's employer in compliance with state or federal law, or the rules or regulations of any applicable self-regulatory organization, such as the Securities and Exchange Commission's Form ADV or other disclosure documents, shall satisfy the requirements of this Rule.

Understanding the Client's Personal and Financial Circumstances: Addressing Incomplete Information

If unable to obtain information necessary to fulfill the scope of the engagement, the CFP® Professional must either limit the scope of engagement to those services the CFP® Professional is able to provide or terminated the engagement.

What standard other than fiduciary standard applies to recommendations? Rule 4.5

In addition to the requirements of Rule 1.4, a certificant shall make and/or implement only recommendations that are suitable for the client.

What forms of discipline maybe imposed by CFP board?

In cases where no grounds for discipline have been established, the DEC may dismiss the matter as either without merit or with a cautionary letter. In all cases, the DEC has the right to require the Respondent to complete additional continuing education or other remedial work, which includes, but is not limited to, completing the coursework required by a CFP Board-Registered Program. Such continuing education or remedial work may be ordered instead of, or in addition to, any discipline listed below. Where grounds for discipline have been established, any of the following forms of discipline may be imposed.

Code of Ethics: Principle 1-Integrity

Integrity: Provide professional services with integrity. Integrity demands honesty and candor which must not be subordinated to personal gain and advantage. Certificants are placed in positions of trust by clients, and the ultimate source of that trust is the certificant's personal integrity. Allowance can be made for innocent error and legitimate differences of opinion, but integrity cannot co-exist with deceit or subordination of one's principles.

What is an "interim suspension"?

Interim suspension is the temporary suspension by the DEC of a CFP® professional's right to use the marks for a definite or indefinite period of time, while proceedings conducted pursuant to these Disciplinary Rules are pending against the CFP® professional. Imposition of an interim suspension shall not preclude the imposition of any other form of discipline entered by the DEC in final resolution of the disciplinary proceeding.

What is the definition of compensation?

Is any non-trivial economic benefit, whether monetary or non-monetary, that a certificant or related party receives or is entitled to receive for providing professional activities

When does a financial planning engagement exist?

It exists when a certificant performs any type of mutually agreed upon financial planning service for a client

Code of Ethics: Principle 2- Objectivity

Objectivity: Provide professional services objectively. Objectivity requires intellectual honesty and impartiality. Regardless of the particular service rendered or the capacity in which a certificant functions, Certificants should protect the integrity of their work, maintain objectivity and avoid subordination of their judgment.

What other matters may be reviewed by CFP Board to determine the fitness of candidates?

Other matters that may reflect adversely upon the profession or the CFP® certification marks will be reviewed by the DEC under the procedures outlined in CFP Board's Disciplinary Rules and Procedures, after the candidate or PER has successfully completed the education, examination and experience requirements for certification. These include, but are not limited to, customer complaints, arbitrations and other civil proceedings, felony convictions for non-violent crimes that occurred more than five years ago, misdemeanor convictions, and employer investigations and terminations. CFP Board requires candidates for CFP® certification and PERs to disclose certain matters on the ethics declaration of the Certification Application

What is the obligation of the practitioner in assessing the current financial situation of the client?

Prior to making recommendations to a client, it is necessary for the financial planning practitioner to assess the client's financial situation and to determine the likelihood of reaching the stated objectives by continuing present activities. The practitioner will utilize client-specified, mutually agreed upon, and/or other reasonable assumptions. Both personal and economic assumptions must be considered in this step of the process. These assumptions may include, but are not limited to, the following: - Personal assumptions, such as: retirement age(s), life expectancy(ies), income needs, risk factors, time horizon and special needs; and - Economic assumptions, such as: inflation rates, tax rates and investment returns.

What are the sources for obtaining "sufficient and relevant quantitative information"?

Prior to making recommendations to the client and depending on the scope of the engagement, the financial planning practitioner shall determine what quantitative information and documents are sufficient and relevant. The practitioner shall obtain sufficient and relevant quantitative information and documents pertaining to the client's financial resources, obligations and personal situation. This information may be obtained directly from the client or other sources such as interview(s), questionnaire(s), client records and documents.

Upon what should goals and objectives be based?

Prior to making recommendations to the client, the financial planning practitioner and the client shall mutually define the client's personal and financial goals, needs and priorities. In order to arrive at such a definition, the practitioner will need to explore the client's values, attitudes, expectations, and time horizons as they affect the client's goals, needs and priorities. The process of "mutually-defining" is essential in determining what activities may be necessary to proceed with the client engagement. Personal values and attitudes shape the client's goals and objectives and the priority placed on them. Accordingly, these goals and objectives must be consistent with the client's values and attitudes in order for the client to make the commitment necessary to accomplish them.

Code of Ethics: Principle 6- Professionalism

Professionalism: Act in a manner that demonstrates exemplary professional conduct. Professionalism requires behaving with dignity and courtesy to clients, fellow professionals, and others in business-related activities. Certificants cooperate with fellow certificants to enhance and maintain the profession's public image and improve the quality of services.

Implementing the Financial Planning recommendation(s): Recommending actions, products and services for implementation

The CFP® must discuss with the client the basis for selecting an action, product or service, the timing and priority of implementing the action, product or service. A CFP® must also disclose and manage any material conflicts of interest concerning the action, product or service.

Can revocation be reversed?

The DEC may order permanent revocation of a Respondent's right to use the marks. In the event of a permanent revocation it shall be standard procedure to publish the fact of the revocation together with identification of the Respondent in a press release, or in such other form of publicity as is selected by the DEC.

Private Censure

The DEC may order private censure of a Respondent, which shall be an unpublished written reproach mailed by the DEC to a censured Respondent.

What is the max term of suspension?

The DEC may order suspension for a specified period of time, not to exceed five years . In the event of a suspension, CFP Board must publish the fact of the suspension together with identification of the Respondent in a press release, or in such other form of publicity as is selected by the DEC. Respondents receiving a suspension may qualify for reinstatement to use the marks as provided in Article 15.

Public Letter of Admonition

The DEC may order that a Public Letter of Admonition be issued against a Respondent, which shall be a publishable written reproach of the Respondent's behavior. It shall be standard procedure to publish the Public Letter of Admonition in a press release or in such other form of publicity selected by the DEC.

What is the standard proof of misconduct?

The Hearing Panel may be guided by the rules of procedure and evidence applicable in a court of law to the extent it believes it is appropriate. Such rules, however, are not binding on the Hearing Panel. Proof of misconduct shall be established by a preponderance of the evidence. A preponderance of the evidence is a legal standard of review that generally means "more probable than not," i.e., evidence which shows that, as a whole, the fact sought to be proved is more probable than not to have occurred.. In the course of the proceedings, the Chair of the Hearing Panel shall administer affirmations. A complete record shall be made of all testimony taken at hearings before the Hearing Panel.

Do the practice standards create a legal liability to a third party?

The Practice Standards are designed to provide certificants with a framework for the professional practice of financial planning. They are not designed to be a basis for legal liability to any third party.

Agreeing on Implementation Responsibilities

The client is responsible for accepting or rejecting recommendations and for retaining and/or delegating implementation responsibilities. The financial planning practitioner and the client shall mutually agree on the services, if any, to be provided by the practitioner. The scope of the engagement, as originally defined, may need to be modified. The practitioner's responsibilities may include, but are not limited to the following: - Identifying activities necessary for implementation - Determining division of activities between the practitioner and the client - Referring to other professionals - Coordinating with other professionals - Sharing of information as authorized; and - Selecting and securing products and/or services If there are conflicts of interest, sources of compensation or material relationships with other professionals or advisers that have not been previously disclosed, such conflicts, sources or relationships shall be disclosed at this time.

What must the practitioner do prior to making recommendations to the client?

The financial planning practitioner and the client shall mutually define the client's personal and financial goals, needs and priorities that are relevant to the scope of the engagement before any recommendation is made and/or implemented.

How must the scope of a financial planning engagement be determined? 100-1: Defining the Scope of the Engagement

The financial planning practitioner and the client shall mutually define the scope of the engagement before any financial planning service is provided.

Selecting Products and Services for implementation

The financial planning practitioner shall investigate products or services that reasonably address the client's needs. The products or services selected to implement the recommendation(s) must be suitable to the client's financial situation and consistent with the client's goals, needs and priorities. The financial planning practitioner uses professional judgment in selecting the products and services that are in the client's interest. Professional judgment incorporates both qualitative and quantitative information. Products and services selected by the practitioner may differ from those of other practitioners or advisers. More than one product or service may exist that can reasonably meet the client's goals, needs and priorities. The practitioner shall make all disclosures required by applicable regulations.

What specific conduct may be a bar to becoming certified?

The following conduct is presumed to be unacceptable and will bar an individual from becoming certified unless the individual petitions the DEC for consideration, and the DEC grants the petition: - Two or more personal or business bankruptcies - Revocation or suspension of a non-financial professional (e.g. real estate, attorney) license, unless the revocation is administrative in nature, i.e. the result of the individual determining not to renew the license by not paying the required fees - Suspension of a financial professional (e.g. registered securities representative, broker/dealer, insurance, accountant, investment advisor, financial planner) license, unless the - Suspension is administrative in nature, i.e. the result of the individual determining not to renew the license by not paying the required fees - Felony conviction for non-violent crimes (including perjury) within the last five years. - Felony conviction for violent crimes other than murder or rape that occurred more than five years ago

What specific conduct is always a bar to becoming certified?

The following conduct is unacceptable and will always bar an individual from becoming certified: - Felony conviction for theft, embezzlement or other financially-based crimes - Felony conviction for tax fraud or other tax- related crimes - Revocation of a financial (e.g. registered securities representative, broker/dealer, insurance, accountant, investment advisor, financial planner) professional license, unless the revocation is administrative in nature, i.e. the result of the individual determining not to renew the license by not paying the required fees - Felony conviction for any degree of murder or rape - Felony conviction for any other violent crime within the last five years

What factors concerning each recommendation must be communicated to a client?

The practitioner shall communicate the factors critical to the client's understanding of the recommendations. These factors may include but are not limited to material: - Personal and economic assumptions - Interdependence of recommendations - Advantages and disadvantages Risks; and/or - Time sensitivity The practitioner should indicate that even though the recommendations may meet the client's goals, needs and priorities, changes in personal and economic conditions could alter the intended outcome. Changes may include, but are not limited to: legislative, family status, career, investment performance and/or health. If there are conflicts of interest that have not been previously disclosed, such conflicts and how they may impact the recommendations should be addressed at this time. Presenting recommendations provides the practitioner an opportunity to further assess whether the recommendations meet client expectations, whether the client is willing to act on the recommendations, and whether modifications are necessary.

If practitioner must limit the scope of the engagement, what must the practitioner do?

The practitioner shall communicate to the client any limitations on the scope of the engagement, as well as the fact that this limitation could affect the conclusions and recommendations.

What things directly affect the recommendation?

The recommendation(s) shall be consistent with and will be directly affected by the following: - Mutually defined scope of the engagement; - Mutually defined client goals, needs and priorities; - Quantitative data provided by the client; - Personal and economic assumptions; - Practitioner's analysis and evaluation of client's current situation; and - Alternative(s) selected by the practitioner. A recommendation may be to continue the current course of action. If a change is recommended, it may be specific and/or detailed or provide a general direction. In some instances, it may be necessary for the practitioner to recommend that the client modify a goal. The recommendations developed by the practitioner may differ from those of other practitioners or advisers, yet each may reasonably meet the client's goals, needs and priorities

What is the standard for considering alternatives to the clients current course of action?

These three Practice Standards emphasize the distinction among the several tasks which are part of this process. These Practice Standards can be described as, "What is Possible?," "What is Recommended?" and "How is it Presented?" The first two Practice Standards involve the creative thought, the analysis, and the professional judgment of the practitioner, which are often performed outside the presence of the client. - First, the practitioner identifies and considers the various alternatives, including continuing the present course of action (Practice Standard 400-1) - Second, the practitioner develops the recommendation(s) from among the selected alternatives (Practice Standard 400-2) - Once the practitioner has determined what to recommend, the final task is to communicate the recommendation(s) to the client (Practice Standard 400-3)

Do the rules create a basis for legal liability to third parties?

Violations of the Rules of Conduct may subject a certificant or Professional Eligible for Reinstatement to discipline. Because CFP Board is a certifying and standards-setting body for those individuals who have met and continue to meet CFP Board's initial and ongoing certification requirements, discipline extends to the rights of Professional Eligible for Reinstatement and certificants to use the CFP® marks. Thus, the Rules are not designed to be a basis for legal liability to any third party.

In communicating recommendation with the client was must certificant avoid?

When presenting a recommendation, the practitioner shall make a reasonable effort to assist the client in understanding the client's current situation, the recommendation itself, and its impact on the ability to meet the client's goals, needs and priorities. In doing so, the practitioner shall avoid presenting the practitioner's opinion as fact.

What must be communicated to the client if the client is referred to another professional?

When referring the client to other professionals or advisers, the financial planning practitioner shall indicate the basis on which the practitioner believes the other professional or adviser may be qualified. If the practitioner is engaged by the client to provide only implementation activities, the scope of the engagement shall be mutually defined, orally or in writing, in accordance with Practice Standard 100-1. This scope may include such matters as the extent to which the practitioner will rely on information, analysis or recommendations provided by others

Analyzing the client's current course of action and potential alternative course(s) of action: Analyzing potential alternative course(s) of action

Where appropriate a CFP® must consider and analyze one or more potential alternative courses of action including their material advantages and disadvantages of each alternative, whether each alternative helps maximize the potential for meeting the clients goals and how each alternative integrates the relevant elements of the client's personal and financial circumstances.

Monitoring progress and updating: Updating goals, recommendations, and implementation decisions

Where the CFP® has updating responsibility, and circumstances warrant changes to the clients goals, recommendations, or selections of actions, products or services the CFP® must update as appropriate in accordance with these Practice Standards.