CPC CPC Ethics & Professional Standards 2 — Questions and Answers
Question 1: A CPC is asked to provide an opinion on a plan design that he believes may violate ERISA's coverage requirements. What should he do?
- Provide the opinion only if the client signs a liability waiver
- Decline to provide the opinion entirely
- Provide the opinion with a clear statement of the legal concern and recommend the client obtain legal counsel (Correct answer)
- Proceed without comment since plan design is ultimately the employer's decision
Correct answer: Provide the opinion with a clear statement of the legal concern and recommend the client obtain legal counsel
Professional standards require the CPC to provide honest advice that includes identifying the potential ERISA compliance risk and recommending the client consult legal counsel for a definitive legal opinion.
Question 2: Under what circumstances may a CPC disclose confidential client plan information without client consent?
- Never—client confidentiality is absolute
- When required by law, court order, or professional disciplinary proceedings (Correct answer)
- When another client asks about a similar plan design
- When the CPC believes the information is publicly available
Correct answer: When required by law, court order, or professional disciplinary proceedings
Confidential client information may be disclosed without consent only when compelled by law, court order, or required by professional oversight bodies in disciplinary proceedings.
Question 3: Which of the following best describes a 'conflict of interest' for a pension consultant?
- Any situation where the consultant works for more than one client in the same industry
- A situation where the consultant's personal or business interests could improperly influence professional judgment (Correct answer)
- Working on both defined benefit and defined contribution plans simultaneously
- Providing services to a plan with fewer than 100 participants
Correct answer: A situation where the consultant's personal or business interests could improperly influence professional judgment
A conflict of interest arises when a consultant has a personal, financial, or business interest that could compromise—or appear to compromise—their objective professional judgment.
Question 4: A CPC transitions a client to another pension consultant. What ethical obligation exists regarding client files and records?
- The CPC may retain all files as business records and is not required to share them
- The CPC must cooperate in the orderly transition of files and records to protect the client's interests (Correct answer)
- The CPC must destroy confidential files within 30 days to protect client privacy
- The CPC must obtain IRS approval before transferring plan records
Correct answer: The CPC must cooperate in the orderly transition of files and records to protect the client's interests
Professional standards require cooperation in client transitions, including providing files and records needed to ensure continuity of service for the client's benefit.
Question 5: When a CPC relies on work product provided by another professional (e.g., a valuation from an appraiser), what is the CPC's responsibility?
- None—the other professional bears sole responsibility for their work
- The CPC must independently verify all aspects of the relied-upon work
- The CPC must assess whether reliance is reasonable and disclose the reliance in their own work product (Correct answer)
- The CPC must obtain the other professional's written certification before using their work
Correct answer: The CPC must assess whether reliance is reasonable and disclose the reliance in their own work product
Professional standards allow reliance on other experts when the reliance is reasonable and disclosed; the CPC need not independently replicate the work but must use professional judgment about its reasonableness.
Question 6: The ASPPA Code of Conduct requires CPCs to be 'competent' when providing services. What does competence require?
- Having passed the CPC exam within the last 5 years
- Possessing the knowledge, skills, and experience necessary for the specific engagement (Correct answer)
- Working under the supervision of a licensed attorney for all legal matters
- Having a minimum of 10 years of pension consulting experience
Correct answer: Possessing the knowledge, skills, and experience necessary for the specific engagement
Competence means having the technical knowledge, practical skills, and relevant experience to perform the specific services being offered, and recognizing when to refer clients to others.
CPC CPC Ethics & Professional Standards 2
A CPC is asked to provide an opinion on a plan design that he believes may violate ERISA's coverage requirements.
What should he do?