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Chapter 23

Chapter 23. Ethical Responsibilities. Ethics, Law, and Codes of Ethics. Ethics Law Code of Ethics. The CFP Board and the Ethics Code. Certified Financial Planner Board of Professional Review (BOPR) Certified Financial Planner Board of Governors Principles Rules CFP designee.

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Chapter 23

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  1. Chapter 23 Ethical Responsibilities Chapter 23: Ethical Responsibilities

  2. Ethics, Law, and Codes of Ethics • Ethics • Law • Code of Ethics Chapter 23: Ethical Responsibilities

  3. The CFP Board and the Ethics Code • Certified Financial Planner Board of Professional Review (BOPR) • Certified Financial Planner Board of Governors • Principles • Rules • CFP designee Chapter 23: Ethical Responsibilities

  4. Principle 1: Integrity • Rule 101 of the Code prohibits the solicitation of clients through “false or misleading communications or advertisements.” • Commingling of funds • Fiduciary relationship Chapter 23: Ethical Responsibilities

  5. Principle 2: Objectivity • Rule 201 states as follows: “A CFP Board designee shall exercise reasonable and prudent professional judgment in providing professional services.” Chapter 23: Ethical Responsibilities

  6. Principle 3: Competence • Two areas of competence are knowledge and the application of that knowledge. • Rule 301 states as follows: “A CFP Board designee shall keep informed of developments in the field of financial planning and participate in continuing education throughout the designee’s professional career in order to improve professional competence in all areas in which the designee is engaged.” Chapter 23: Ethical Responsibilities

  7. Principle 4: Fairness • The Code provides that a CFP Board designee “shall perform professional services in a manner that is fair and reasonable to clients, principals, partners, and employers and shall disclose conflict(s) of interest(s) in providing such services.” Chapter 23: Ethical Responsibilities

  8. Principle 5: Confidentiality • Rule 501 provides that a CFP Board designee is prohibited from revealing “or use for his or her own benefit—without the client’s consent, any personally identifiable information relating to the client relationship or the affairs of the client, except and to the extend disclosure or use is reasonably necessary.” Chapter 23: Ethical Responsibilities

  9. Principle 6: Professionalism • “A CFP Board designee’s conduct in all matters shall reflect credit upon the profession.” • CFP Board designees must “use the marks in compliance with the rules and regulations of the CFP Board.” Chapter 23: Ethical Responsibilities

  10. Principle 7: Diligence • “A CFP Board designee shall act diligently in providing professional services.” • Under Rule 701, a CFP Board designee “shall provide services diligently.” Chapter 23: Ethical Responsibilities

  11. Disciplinary Rules and Procedures • “The Procedures” are the rules and regulations for disciplinary proceedings against CFP Board designees. • A standard of proof, or “burden of proof,” is the requirement of proving facts to a certain degree of probability. Chapter 23: Ethical Responsibilities

  12. Burdens of Proof • Preponderance of the evidence • Clear and convincing evidence • Evidence beyond a reasonable doubt Chapter 23: Ethical Responsibilities

  13. Grounds and Forms of Discipline • Grounds for discipline--any act which violates the Code, fails to comply with the Practice Standards, violates any criminal laws, whether the CFP Board designee is convicted or acquitted, is the proper basis for professional suspension, violates these Procedures or an order of discipline • Failure to respond to a request of the CFP Board without good cause, or obstruction of the CFP Board or staff in the performance of their duties • Any false or misleading statement made to the CFP Board • Other acts amounting to unprofessional conduct Chapter 23: Ethical Responsibilities

  14. Grounds and Forms of Discipline(cont’d) • Forms of Discipline • Private censure • Public letter of admonition • Suspension • Revocation Chapter 23: Ethical Responsibilities

  15. The Practice Standards • The 100 Series – establishing and defining the relationship with the client. • The 200 Series – gathering client data. • The 300 Series – analyzing and evaluating the client’s financial status. • The 400 Series – developing and presenting the financial planning recommendations. Chapter 23: Ethical Responsibilities

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