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 CFP Board's Code of Ethics requires CFP professionals to act as fiduciaries — placing the client's interest first at all times when providing financial advice.

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

Discovering undisclosed material information requires the planner to address it with the client and reassess how it may affect the planning recommendations or the engagement.

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

Receiving compensation that differs based on product recommendations creates a conflict of interest that must be fully disclosed to the client under fiduciary and suitability obligations.

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

Professional competence requires limiting advice to areas where the practitioner has adequate knowledge and skill, while referring clients to qualified specialists for matters outside that competence.

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

Professionals must safeguard client information, obtaining consent before disclosure to third parties and complying with applicable privacy laws like Gramm-Leach-Bliley.

CFC - Certified Financial Consultant Practice Test

CFC - Certified Financial Consultant Practice Test

CFC Ethics and Professional Standards 1