Financial Planning: Process and Rules - Part 2 - Rules Relating to the Principle of Integrity
As stated in Part I - Principles, the Principles apply to all CFP Board designees. However, due to the nature of a CFP Board designee's particular field of endeavor, certain Rules may not be applicable to that CFP Board designee's activities. The universe of activities engaged in by a CFP Board designee is indeed diverse and a particular CFP Board designee may be performing all, some or none of the typical services provided by financial planning professionals. As a result, in considering the following Rules, a CFP Board designee must first recognize what specific services he or she is rendering and then determine whether or not a specific Rule is applicable to those services. To assist the CFP Board designee in making these determinations, the Standards of Professional Conduct includes a series of definitions of terminology (see page 2) used throughout the Code of Ethics. Based upon these definitions, a CFP Board designee should be able to determine which services he or she provides and, therefore, which Rules are applicable to those services.
Rules that Relate to the Principle of Integrity
A certificant shall not communicate, directly or indirectly, to clients or prospective clients any false or misleading information directly or indirectly related to the certificant’s professional qualifications or services. A certificant shall not mislead any parties about the potential benefits of the certificant’s service. A certificant shall not fail to disclose or otherwise omit facts where that disclosure is necessary to avoid misleading clients.
A certificant shall treat prospective clients and clients fairly and provide professional services with integrity and objectivity.
If the services include financial planning or material elements of the financial planning process, the certificant or the certificant’s employer shall enter into a written agreement governing the financial lanning services (“Agreement”). The Agreement shall specify:
a. The parties to the Agreement,
b. The date of the Agreement and its duration,
c. How and on what terms each party can terminate the Agreement, and
d. The services to be provided as part of the Agreement.
The Agreement may consist of multiple written documents. Written documentation that includes the elements above and is used by a certificant or certificant’s employer in compliance with state and/or federal law, or the rules or regulations of any applicable self-regulatory organization, such as a Form ADV or other disclosure, shall satisfy the requirements of this Rule.
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.
A certificant shall take prudent steps to protect the security of information and property, including the security of stored information, whether physically or electronically, that is within the certificant’s control.
A certificant shall clearly identify the assets, if any, over which the certificant will take custody, or exercise investment discretion, or exercise supervision.
A certificant shall identify and keep complete records of all funds or other property of a client in the custody, or under the discretionary authority, of the certificant.
A certificant shall not commingle a client’s property with the property of the certificant or the certificant’s employer, unless the commingling is permitted by law or is explicitly authorized and defined in a written agreement between the parties.
A certificant shall not commingle a client’s property with other clients’ property unless the commingling is permitted by law or the certificant has both explicit written authorization to do so from each client involved and without sufficient record-keeping to track each client’s assets accurately.
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