Practice Standards 400-2 series relates to which aspect of the CFP Board Code of Ethics and Professional Responsibility?

Practice Standards 400-2 series relates to which aspect of the CFP Board Code of Ethics and Professional Responsibility?

• A. Recommendations
• B. Confidentiality
• C. Professionalism
• D. Diligence

Answer: (A)

The main concept tested is how CFP professionals handle client recommendations. Practice Standards 400-2 governs the development and communication of recommendations to clients, ensuring the advice is based on a solid analysis of the client’s goals, circumstances, and best interests. It requires considering alternatives, selecting a suitable course of action, and clearly explaining the rationale and basis for the recommendation, including any disclosures about conflicts of interest or limitations in the analysis. This is distinct from confidentiality (protecting client information), professionalism (overall conduct and service quality), and diligence (thoroughness of the planning process). Therefore, the focus is on the area of Recommendations.

The main concept tested is how CFP professionals handle client recommendations. Practice Standards 400-2 governs the development and communication of recommendations to clients, ensuring the advice is based on a solid analysis of the client’s goals, circumstances, and best interests. It requires considering alternatives, selecting a suitable course of action, and clearly explaining the rationale and basis for the recommendation, including any disclosures about conflicts of interest or limitations in the analysis. This is distinct from confidentiality (protecting client information), professionalism (overall conduct and service quality), and diligence (thoroughness of the planning process). Therefore, the focus is on the area of Recommendations.