For CFP® Professionals

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Frequently Asked Questions

Introduction

This section provides answers to Frequently Asked Questions (FAQs) concerning CFP Board’s Standards of Professional Conduct (Standards) and differs from the previous version in several ways. The answers are generally shorter and easier to understand. Arranged by topic, these FAQs provide a way for CFP® professionals to quickly locate information that may help to assure compliance with the Standards. The revised FAQs derive from the efforts of CFP Board’s Business Model Working Group in 2010. The Working Group consists of volunteers from the compliance and financial planning departments of more than 20 financial services firms, as well as CFP Board staff.

The twelve topic areas are:

Financial Planning – Look here for questions about whether an engagement is financial planning and the specific requirements of financial planning engagements.

Fiduciary Duty – Look here to understand CFP Board’s fiduciary standard of care and how it is applied.

Disclosure & Written Agreement – Financial Planning – Look here to learn more about the specific disclosure requirements when providing financial planning.

Disclosure – Non-Financial Planning – Look here to learn more about the specific disclosure requirements when not providing financial planning.

Principal Trades & Proprietary Products – Look here to find out about the required disclosures concerning the conflicts of interest associated with these transactions.

Federal & State Regulation – Look here for questions regarding how CFP Board’s Standards relate to current federal and state regulation.

Holding Out – Look here to determine when the Standards apply.

Team Arrangements – Answers questions regarding how to apply the Standards to team practices.

Terminating Engagements – Look here to learn more about how to end a financial planning relationship.

Firm Obligations – This section clarifies CFP Board’s enforcement activity regarding employers and firms.

Liability – Look here to learn how CFP Board’s Standards affect your liability.

Why Revise the Standards? – Look here to learn why CFP Board periodically makes changes to the Standards.

CFP Board wants all CFP® professionals to have a thorough understanding of the Standards of Professional Conduct. Questions not answered in these FAQs may be sent to standards@cfpboard.org for consideration and possible inclusion in future revisions of this document.

INDEX

Financial Planning

Question 1-1: How does CFP Board define financial planning?

Question 1-2: Will CFP Board consider an engagement to be financial planning solely because the CFP® professional used the six-step process?

Question 1-3: Does CFP Board require CFP® professionals to address a certain number of subject areas for the engagement to be considered financial planning?

Question 1-4: Does CFP Board require CFP® professionals to address particular subject areas in order for the engagement to be considered financial planning?

Question 1-5: Does CFP Board require CFP® professionals to complete all six steps for an engagement to be considered financial planning?

Question 1-6: Will CFP Board consider future engagements to be financial planning because the CFP® professional provided financial planning to the same client(s)?

Question 1-7: Will CFP Board consider an engagement to be financial planning solely based on the compensation model used by the CFP® professional?

Question 1-8: What types of activities are considered “material elements of financial planning”?

Question 1-9: How can CFP® professionals determine when a specific service or activity rises to the level of financial planning?

Question 1-10: What should I do if I am unsure whether a specific service or activity rises to the level of financial planning?

Question 1-11: What distinctions do the Standards make between financial planning services and other services that don’t rise to the level of financial planning?

Question 1-12: Does conducting a needs analysis or suitability review reach the level of financial planning or material elements of financial planning?

Question 1-13: How many elements of the financial planning process can a CFP® professional provide without having those activities constitute “material elements of financial planning”?

Question 1-14: How many financial planning subject areas can a CFP® professional address with a client without reaching the level of “material elements of financial planning”?

Question 1-15: In situations where a CFP® professional implements financial planning recommendations prepared by a third party, will the CFP® professional’s implementation activities be considered financial planning or material elements of financial planning?

Question 1-16: Is a CFP® professional who provides financial planning services more likely to be disciplined by CFP Board than a CFP® professional who does not provide financial planning services?

Fiduciary Duty

Question 2-1: Why doesn't CFP Board just say that all CFP® professionals are fiduciaries?

Question 2-2: How can a CFP® professional be certain that a recommendation is the “best” for a client, given the enormous variety of financial strategies and products available?  Does CFP Board expect CFP® professionals to investigate every conceivable option that might be available to a particular client?

Question 2-3: Is it possible for a CFP® professional to be subject to two different standards of care at the same time under CFP Board Rules of Conduct?

Disclosure & Written Agreement – Financial Planning

Question 3-1: What disclosures do the Standards require for client engagements that do involve financial planning or material elements of financial planning?

Question 3-2: When, what and how does CFP Board require disclosure to clients and prospective clients when providing financial planning?

Question 3-3: Does CFP Board expect CFP® professionals to hand deliver disclosure documents, or can the documents be posted or delivered on a CFP® professional’s or the CFP® professional’s employer’s Web site?

Question 3-4: When should a CFP® professional send out disclosure documents to clients?

Question 3-5: In what ways are the disclosures required by the current Standards different from the disclosure requirements in the former Standards?

Question 3-6:: How does a CFP® professional disclose compensation?

Question 3-7: What does CFP Board mean by “costs” and “any other sources of compensation”?

Question 3-8: Is any additional written documentation required by the Standards?

Question 3-9: Will CFP Board provide sample agreements and disclosures that CFP® professionals can use with their clients?

Disclosure – Non-Financial Planning

Question 4-1: What disclosures do the Standards require for client engagements that do not involve financial planning or material elements of financial planning?

Question 4-2: When, what and how does CFP Board require disclosure to clients and prospective clients when not providing financial planning? 

Question 4-3: Does a CFP® professional who is not providing financial planning or using the financial planning process need to provide clients or prospective clients with written disclosure documents?

Principal Trades & Proprietary Products

Question 5-1: How do the Standards relate to CFP® professionals who provide clients principal-trade transactions?

Question 5-2: Do the Standards apply to CFP® professionals who recommend or sell proprietary financial products?

Federal & State Regulation

Question 6-1: How do the Standards relate to federal and state statutes, rules, regulations and case law with respect to the obligations of a CFP® professional?

Question 6-2: Why doesn’t CFP Board use the same definitions used by federal and state regulators and courts for important terms such as “financial planning” and “fiduciary”?

Question 6-3: Will the Standards be applied differently for CFP® professionals with different licenses or registrations (such as registered representatives, investment adviser representatives, insurance agents)?

Holding Out

Question 7-1: Do the Standards apply to those who hold CFP® certification but who do not display the CFP® marks or hold themselves out as financial planners?

Team Arrangements

Question 8-1: How do the Standards relate to CFP® professionals who provide services as part of a team arrangement?

Terminating Engagements

Question 9-1: Is it possible for a client of a CFP® professional to terminate the financial planning engagement with the CFP® professional and still receive other services from the CFP® professional?

Firm Obligations

Question 10-1: Are firms required to ensure that their employees and representatives who hold the CFP® certification adhere to CFP Board’s ethical standards?

Liability

Question 11-1: Do the Standards increase liability for CFP® professionals?

Why Revise the Standards?

Question 12-1: Why did CFP Board revise the ethical standards for CFP® professionals?

Question 12-2: Are the current Standards stronger than the former Standards?

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