CFP Professional Standards & Competencies 2

Question 1

A CFP® professional discovers their client has been the victim of financial elder abuse by a family member. What is the MOST appropriate first step?

Accepted Answer

Discuss the situation with the client to understand their wishes and assess safety, then consider mandatory reporting obligations

Answer

The CFP® professional should first discuss the matter with the client to understand their perspective and assess safety before taking action, while also considering any mandatory reporting requirements under applicable law.

Question 2

Under the CFP Board's Practice Standards, which of the following BEST describes the 'understanding the client's personal and financial circumstances' step?

Accepted Answer

Gathering quantitative data such as income, expenses, assets, liabilities, and qualitative data such as goals, values, and risk tolerance

Answer

This step requires collecting both quantitative financial data and qualitative information about the client's goals, values, health, family situation, and risk tolerance to form a complete picture.

Question 3

A CFP® professional who is also a registered investment adviser charges an hourly fee for financial planning. A referral arrangement with a mutual fund company requires disclosure of:

Accepted Answer

The referral arrangement and any compensation received therefrom, in writing, prior to or at the time of engagement

Answer

CFP Board's Code requires disclosure of all sources of compensation, including referral arrangements, in writing before or at the point of engagement, regardless of the amount.

Question 4

Which scenario BEST illustrates a violation of CFP Board's competence standard?

Accepted Answer

A CFP® professional provides estate planning advice on a complex multi-generational trust without adequate knowledge or referral to a specialist

Answer

Providing advice on complex matters outside one's competence without referring to a qualified specialist violates the CFP Board's competence standard under the Code of Ethics.

Question 5

The CFP Board's fiduciary standard applies:

Accepted Answer

At all times when providing financial planning or material elements of financial planning

Answer

CFP Board's fiduciary duty applies at all times when the CFP® professional is providing financial planning or material elements of it, regardless of their employer or compensation model.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Professional Standards & Competencies 2