CFC Ethics and Professional Standards 1

Question 1

Under CFP Board's fiduciary standard, a financial planner must always act in:

Accepted Answer

The client's best interest

Answer

The firm's best interest

Answer

The interest of both client and firm equally

Answer

Accordance with product suitability rules only

Question 2

A CFC who discovers a material fact about a client's financial situation that the client did not disclose must:

Accepted Answer

Address it with the client and consider how it affects the advice

Answer

Immediately terminate the engagement

Answer

Ignore it if not relevant to the current recommendation

Answer

Share it with the client's spouse without asking

Question 3

Which action by a financial consultant would constitute a conflict of interest that must be disclosed?

Accepted Answer

Recommending a product for which the planner receives a higher commission than alternatives

Answer

Recommending index funds with no personal financial stake

Answer

Providing comprehensive planning to a client for a flat fee

Answer

Using a standardized fact-finding questionnaire

Question 4

Competence as an ethical obligation requires a financial professional to:

Accepted Answer

Provide advice only within their areas of knowledge and skill, referring out when appropriate

Answer

Hold every possible designation in the industry

Answer

Guarantee investment returns to demonstrate skill

Answer

Never work with complex clients to avoid errors

Question 5

Confidentiality obligations in financial planning mean the practitioner must:

Accepted Answer

Protect client information and only disclose it with client consent or as required by law

Answer

Share client data freely with affiliated firms

Answer

Post client success stories on social media without names

Answer

Retain all client records indefinitely with no destruction policy

Question 6

A CFC who charges a fee while also receiving commissions on products sold to the same client is operating under which compensation model?

Accepted Answer

Fee-based (fee-and-commission)

Answer

Fee-only

Answer

Commission-only

Answer

Pro bono