Financial Planning: Process and Rules - Part 2 - Rules Relating to the Principle of Fairness

Rule 401

Rule 1.2

If the certificant’s services include financial planning or material elements of the financial planning process, prior to entering into an agreement, the certificant shall provide written information  nd/or discuss with the prospective client or client the following:

a. The obligations and responsibilities of each party under the agreement with respect to:

i Defining goals, needs and objectives,

ii Gathering and providing appropriate data,

iii Examining the result of the current course of action without changes,

iv The formulation of any recommended actions,

v Implementation responsibilities, and

vi Monitoring responsibilities.

b. Compensation that any party to the agreement or any legal affiliate to a party to the agreement will or could receive under the terms of the agreement; and factors or terms that determine costs, how decisions benefit the certificant and the relative benefit to the certificant.

c. Terms under which the agreement permits the certificant to offer proprietary products.

d. Terms under which the certificant will use other entities to meet any of the agreement’s obligations. If the certificant provides the above information in writing, the certificant shall encourage  he prospective client or client to review the information and offer to answer any questions that the prospective client or client may have.

Rule 2.2

A certificant shall disclose to a prospective client or client the following information:

a. An accurate and understandable description of the compensation arrangements being offered. This description must include:

i. Information related to costs and compensation to the certificant and/or the certificant’s employer, and

ii. Terms under which the certificant and/or the certificant’s employer may receive any other sources of compensation, and if so, what the sources of these payments are and on what they are based.

b. A general summary of likely conflicts of interest between the client and the certificant, the certificant’s employer or any affiliates or third parties, including, but not limited to, information about any familial, contractual or agency relationship of the certificant or the certificant’s employer that has a potential to materially affect the relationship.

c. Any information about the certificant or the certificant’s employer that could reasonably be expected to materially affect the client’s decision to engage the certificant that the client might reasonably want to know in establishing the scope and nature of the relationship, including but not limited to information about the certificant’s areas of expertise.

d. Contact information for the certificant and, if applicable, the certificant’s employer.

e. If the services include financial planning or material elements of the financial planning process, these disclosures must be in writing. The written disclosures may consist of multiple written documents.

Written disclosures used by a certificant or the certificant’s employer that has a potential to materially affect the relationship.

c. Any information about the certificant or the certificant’s employer that could reasonably be expected to materially affect the client’s decision to engage the certificant that the client might reasonably want to know in establishing the scope and nature of the relationship, including but not limited to information about the certificant’s areas of expertise.

d. Contact information for the certificant and, if applicable, the certificant’s employer.

e. If the services include financial planning or material elements of the financial planning process, these disclosures must be in writing. The written disclosures may consist of multiple written documents. Written disclosures used by a certificant or certificant’s employer that includes the elements listed above, and are used in compliance with state or federal laws, or the rules or requirements of any applicable self-regulatory organization, such as a Form ADV or other disclosure documents, shall satisfy the requirements of this Rule. The certificant shall timely disclose to the client any material changes to the above information.

Rule 4.3

A certificant shall be in compliance with applicable regulatory requirements governing professional services provided to the client.

Rule 4.7

A certificant shall advise his or her current clients of any certification suspension or revocation he or she receives from CFP Board.

Rule 402

Rule 1.2

If the certificant’s services include financial planning or material elements of the financial planning process, prior to entering into an agreement, the certificant shall provide written information and/or

discuss with the prospective client or client the following:

a. The obligations and responsibilities of each party under the agreement with respect to:

i. Defining goals, needs and objectives,

ii. Gathering and providing appropriate data,

iii. Examining the result of the current course of action without changes,

iv. The formulation of any recommended actions,

v. Implementation responsibilities, and

vi. Monitoring responsibilities.

b. Compensation that any party to the agreement or any legal affiliate to a party to the agreement will or could receive under the terms of the agreement; and factors or terms that determine cost, how decisions benefit the certificant and the relative benefit to the certificant.

c. Terms under which the agreement permits the certificant to offer proprietary products.

d. Terms under which the certificant will use other entities to meet any of the agreement’s obligations.

If the certificant provides the above information in writing, the certificant shall encourage the prospective client or client to review the information and offer to answer any questions that the prospective client or clients may have.

 

Rule 2.2

A certificant shall provide a prospective client disclosure of the following information:

a. An accurate and understandable description of the compensation arrangements being offered. This description must include:

i. Information related to costs to clients and compensation to the certificant and/or the certificant’s employer, and

ii. Terms under which the certificant and/or the certificant’s employer may receive any other sources of compensation, and if so, what the sources of these payments are and on what they are based.

b. A general summary of likely conflicts of interest between the client and the certificant, the certificant’s employer or any affiliates or third parties, including, but not limited to, information about any familial, contractual or agency relationship of the certificant or the certificant’s employer that has a potential to materially affect the relationship.

c. Any information about the certificant or the certificant’s employer that could reasonably be expected to materially affect the client’s decision to engage the certificant that the client might reasonably want to know in establishing the scope and nature of the relationship, including but not limited to information about the certificant’s areas of expertise.

d. Contact information for the certificant and, if applicable, the certificant’s employer.

e. If the services include financial planning or material elements of the financial planning process, these disclosures must be in writing. The written disclosures may consist of multiple written documents. Written disclosures used by a certificant or 

certificant’s employer to comply with state and/or federal laws and regulations, such as a Form ADV or other disclosure documents, may be considered in compliance with this Rule.

Rule 403

Rule 2.2

A certificant shall disclose to a prospective client or client the following information:

a. An accurate and understandable description of the compensation arrangements being offered. This description must include:

i. Information related to costs and compensation to the certificant and/or the certificant’s employer, and

ii. Terms under which the certificant and/or the certificant’s employer may receive any other sources of compensation, and if so, what the sources of these payments are and on what they are based. The certificant shall timely disclose to the client any material changes to the above information.

Rule 404

(Rule 1.3 requires financial planning engagements to be accompanied  by a written agreement specifying the services to be provided as part of the Agreement. Rule 2.2(e) requires written disclosure of compensation arrangements, among other things. Changes to services offered or compensation arrangements should be established definitively through revision of these written agreements, thereby eliminating the need for periodic updates.)

Rule 405

Rule 1.4

A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of the financial planning process, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board.

Rule 4.1

A certificant shall treat prospective clients and clients fairly and provide professional services with integrity and objectivity.

Rule 406

Rule 5.1

A certificant who is an employee/agent shall perform professional services with dedication to the lawful objectives of the employer/principal and in accordance with CFP Board’s Code of Ethics.

Rule 407

Rule 2.2

A certificant shall provide a prospective client disclosure of the following information:

d. Contact information for the certificant and, if applicable, the certificant’s employer.

Rule 4.7

A certificant shall advise his or her current clients of any certification suspension or revocation he or she receives from CFP Board.

Rule 5.2

A certificant who is an employee/agent shall advise his or her current employer/principal of any certification suspension or revocation he or she receives from CFP Board.

 

Rule 408

Rule 4.3

A certificant shall be in compliance with applicable regulatory requirements governing professional services provided to the client.

Rule 5.1

A certificant who is an employee/agent shall perform professional services with dedication to the lawful objectives of the employer/principal and in accordance with CFP Board’s Code of Ethics.

Rule 409

Rule 1.4

A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of the financial planning process, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board.

Rule 3.6

A certificant shall not borrow money from a client. Exceptions to this Rule include:

a. The client is a member of the certificant’s immediate family, or

b. The client is an institution in the business of lending money and the borrowing is unrelated to the professional services performed by the certificant.

Rule 3.7

A certificant shall not lend money to a client. Exceptions to this Rule include:

a. The client is a member of the certificant’s immediate family, or

b. The certificant is an employee of an institution in the business of lending money and the money lent is that of the institution, not the certificant.

Rule 4.1

A certificant shall treat prospective clients and clients fairly and provide professional services with integrity and objectivity.

 

Part 2 - Rules Relating to the Principle of Confidentiality


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