Financial Counseling Principles & Ethics Flashcards
7 cards from real AFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Counseling Principles & Ethics flashcards as text
A financial counselor discovers a client has been hiding assets from their spouse during a joint session. What is the ethically appropriate first step?
Answer: Address the conflict of interest and consider whether joint counseling can continue
When a conflict of interest arises in joint counseling, the counselor must address the situation directly and assess whether impartial service to both parties can continue.
Which ethical principle requires a financial counselor to place the client's interests above their own personal or financial gain?
Answer: Fiduciary duty
Fiduciary duty obligates the counselor to act in the client's best interest rather than their own, prioritizing the client's financial well-being.
A client asks their AFC to recommend a specific investment product. How should the counselor respond?
Answer: Explain that AFCs provide counseling and education, not investment advice, and refer to a licensed advisor
AFCs practice within their scope by providing financial education and counseling, referring investment advice to appropriately licensed professionals.
Under the AFC Code of Ethics, what must a counselor do when they recognize they lack competence to address a client's specific issue?
Answer: Refer the client to a qualified professional
The competence standard requires counselors to refer clients to qualified professionals when the issue falls outside their expertise.
A financial counselor works for a nonprofit agency that receives funding from a payday lending company. What ethical concern does this raise?
Answer: A potential conflict of interest that must be disclosed to clients
Funding sources that could influence counseling recommendations create conflicts of interest that must be transparently disclosed to clients.
Which practice best demonstrates the principle of client self-determination in financial counseling?
Answer: Presenting options and allowing the client to choose their own course of action
Self-determination means empowering clients to make their own informed decisions rather than directing or controlling their choices.
A counselor notices a client appears to be in an abusive relationship where their partner controls all finances. What is the counselor's primary ethical obligation?
Answer: Ensure client safety and provide information about resources while respecting autonomy
The counselor must prioritize client safety, provide relevant resources, and respect the client's autonomy in deciding how to proceed.