AAFM Financial Planning Principles Flashcards

A planner learns confidential client information and shares it with a marketing partner without consent. Which ethical duty is breached?

Answer: Confidentiality

Disclosing client information without permission violates the duty of confidentiality.

Which statement best describes a fiduciary standard of care?

Answer: Acting in the client's best interest above the planner's own

A fiduciary must place the client's interests ahead of their own at all times.

During data gathering, which item is an example of quantitative rather than qualitative information?

Answer: The client's annual income figure

Quantitative data are measurable numbers such as income, while attitudes are qualitative.

A net worth statement is calculated as which of the following?

Answer: Total assets minus total liabilities

Net worth equals what a client owns minus what they owe.

Which document tracks a client's income and expenses over a period to reveal savings capacity?

Answer: Cash flow statement

A cash flow statement shows inflows and outflows, revealing how much can be saved.

When a recommendation involves a conflict of interest, what must an ethical planner do?

Answer: Disclose the conflict clearly to the client

Ethical practice requires full and clear disclosure of any conflicts of interest.

Which behavior best demonstrates the principle of competence in financial planning?

Answer: Referring a complex tax matter to a qualified specialist

Recognizing limits and referring specialized matters reflects competent, ethical practice.