CFP Course 1 Module 1: Financial Planning Process Exam Questions And Answers
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Course
FPQP
Institution
FPQP
Fiduciary Duty - ANS At all times when providing financial advice to clients, CFP must act as a fiduciary, act in the best interest of the client
Four E's of CFP certification - ANS Education, Examination, Experience, Ethics
Financial Planning - ANS Collaborative proce...
CFP Course 1 Module 1: Financial
Planning Process Exam Questions And
Answers
Fiduciary Duty - ANS At all times when providing financial advice to clients, CFP must act
as a fiduciary, act in the best interest of the client
Four E's of CFP certification - ANS Education, Examination, Experience, Ethics
Financial Planning - ANS Collaborative process that helps maximize a client's potential for
meeting life goals through financial advice that integrates relevant elements of the client's
personal and financial circumstances
Financial planning vs financial advice - ANS -CFP provides financial planning through
financial advice
-While Fin Planning requires financial advice, not all fin advice requires fin planning
When does Fiduciary duty apply? (Advice vs. planning) - ANS -Fiduciary duty applies to
Financial Advice
-
When do practice standards apply? - ANS If financial advice requires financial planning,
and the client agrees to financial planning, the practice standards apply
What is not financial advice? - ANS -Communication that is not viewed as a
recommendation
-Responses to direct orders
-Marketing materials, general financial materials, general financial comms.
Scope of Engagement (when does it exist, rules for communicating) - ANS -Must be
defined prior to service (usually in 1st or second meeting)
-Must be in writing
-Engagement Exists when a client has a reasonable basis to believe FinPlan is or will be
provided, CFP has agreed to provide FinPLan, the Fin Advice requires integration of relevant
elements of clients' personal or financial services
, Five Integration Factors used to determine whether a CFP is required to provide FinPlan and
comply with Practice Standards - ANS -Number of relevant elements in the client's
personal/financial circumstances that the FinAdvice may affect
-Portion and amount of client's assets that the FinAdvice may affect
-Length of time the clients circumstances may be affected by FinAdvice
-Effect on client's overall exposure to risk
-Barriers to modify actions taken to implement the FinAdvice
Activities CFP board would consider financial planning - ANS -Conducting detailed
data-gathering re. Multiple aspects of a client's financial situation
-Analyzing a client's data and making reccs. Across multiple financial planning subject areas
-providing investment advisory services as defined by the applicable state/federal regulators
Activities CFP board would not consider relevant elements of fin planning - ANS -opening
account
-completing an application
-fact finding to meet reg. Requirements for "know your customer" rules
-solely providing brokerage and/or insurance products/services
-acting as a mortgage broker without providing other financial services
-teaching a financial class/continuing education program
Engagement letter - ANS Provided to clients in 1-2 meeting and presented in writing, must
include terms of engagement between client and CFP, scope of engagement, period services
will be provided, client's responsibility
What is a CFP responsible for (unless excluded from Scope of Engagment?) - ANS
Implementing, monitoring, updating FinPlanning reccs.
Code of Ethics - ANS a CFP professional must:
-act with honesty, integrity, competence, diligence
-act in client's best interest
-exercise due care
-avoid or disclose & manage conflicts of interest
-maintain confidentiality and protect privacy of client information
-Act in a manner that reflects positively on financial planning profession/CFPs
Standards of Conduct - ANS -fiduciary duty
-integrity
-competence
-diligence
-disclose and manage conflicts of interest
-sound and objective professional judgement
-professionalism
-comply with law
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