CFP Ethics Practice Test

These questions are part of the practice quiz. Start practicing

• Which description matches the type of information developed prior to finalizing the plan?
• Which statement accurately describes registrants in relation to the Code of Ethics?
• Practice Standards 600 Series (monitoring) defines monitoring responsibilities. Which statement is true?
• If you have proof that a CFP certificant commingled client funds with personal funds used for his wife's rehab, what should you do?
• Which noun is not approved to be used with the CFP marks?
• Which statement about the CFP Board's Code of Ethics and civil liability is correct?
• Which statement about confidentiality is true?
• Regarding defining the scope of the engagement in the first step of the financial planning process, which statements are true?
• Which statement explains how a CFP should handle investment recommendations when they may conflict with a client's objectives due to higher returns elsewhere?
• Unless the client has changing needs or circumstances, with what frequency should the advisor meet with the client to review the plan?
• If a CFP provides financial planning that includes general tax planning, what limits apply?
• Which guideline best describes the handling of gifts from clients or third parties?
• Following a data breach involving client information, which set of actions should a CFP professional take?
• How should CFP professionals manage conflicts of interest when advising clients?
• When presenting a forecast of investment performance to clients, what standard must be followed?
• A financial planning practitioner shall make a timely written disclosure of all material information. Which items should be included?
• Which term describes a written reproach that may be published in media unless mitigating circumstances exist?
• What disclosure is required regarding fees and compensation?
• Which statement best defines a material conflict of interest in CFP practice?
• Practice Standard 200-1 refers to which of the following?
• How should CFP professionals stay compliant with regulatory changes?
• If a conflict of interest is identified in the review process, what is the recommended course of action?
• Under CFP ethics, the suitability standard primarily concerns:
• If a CFP professional is not providing financial planning or using the financial planning process, must they provide clients with written disclosure documents?
• Which action best satisfies the CFP's obligation when a potential conflict of interest exists?
• A client is shopping for a financial planner and is too busy to review all information again. What should you do next?
• Regarding material information relative to the professional relationship with the client, which statement is true?
• In handling a tax-related issue outside the CFP's scope, which actions are appropriate?
• Which of the following is not a prescribed form of discipline for a CFP practitioner?
• Under CFP ethics, termination of the relationship is appropriate when the client asks you to perform illegal actions.
• When should a CFP implement data retention and secure destruction of confidential client information?
• What should accompany a written financial plan to demonstrate due care?
• In a CFP engagement, which document should describe the scope of engagement?
• Which actions must take place before providing any personal financial planning services?
• If a CFP professional is approached with an investment-related tax problem and does not have tax expertise, which actions are appropriate?
• Which item is not typically part of Step 2 data collection?
• If a CFP suspects confidential client information has been misused, what is the appropriate action?
• How are goals and objectives typically formed in the planning process?
• How should a CFP professional conduct themselves on social media regarding client information?
• If a CFP has a close family relationship with a client or colleague, what must be done to maintain ethics?
• When recommending a custodian for assets, what duty does the CFP have?
• If a client asks for special treatment due to a personal relationship, what is required?
• Which statement about continuing education is true for CFP certificants?
• If a client's objectives change, how should the CFP respond?
• During the monitoring step, you have gathered new data from an existing client. Which ranking from highest reason to lowest reason to change the plan is correct?
• How should a CFP obtain consent for a financial planning disclosure that could affect the client?
• Which statement best describes the CFP fiduciary standard?
• When treating a vulnerable client, what is essential regarding consent and disclosure?
• A CFP professional has a potential conflict because they receive a referral fee from a mutual fund company for recommending its fund. What is required?
• Which statement best describes appropriate handling of nonpublic client information in public communications?
• Which credential notation is acceptable on a CFP professional's business card?
• When considering replacing a client's existing investment with a new product, what duty applies?
• Is a written financial planning agreement a contract?
• Which statement best describes how to disclose outside business activities involving client data?
• What is the primary purpose of defining the scope of engagement in a client-planner relationship?
• The exact amount of overall compensation does not have to be disclosed. It can be an estimate. Which statement is correct?
• Which statement best describes the required qualities of a custodian recommended by a CFP?
• A client asks to limit engagement to the first four steps of the financial planning process. Can you enter into a written agreement to limit engagement to the first four steps and then end it?
• Are outside business activities that could use client data or affect objectivity required to be disclosed to clients before they begin?
• In a financial planning engagement, which elements are typically included in the written agreement?
• Regarding written engagement agreements, which statement is accurate?
• When collecting client information for planning, what must be obtained before sharing data with third parties?
• What should you do if a client has unrealistic return expectations but wants to proceed?
• In the financial planning process, what is the first step with a new client?
• When reviewing a client's 1040 return that contains errors, what should a financial planner do?
• When a client requests a scope change, what is the recommended step to take?
• In the implementation phase, which activity is most appropriately handled as a joint decision between the planner and client?
• If a CFP professional receives an undisclosed rebate from a product sponsor for recommending its product, what is the issue and remedy?
• What is the proper process for handling complaints about the CFP Board's Code of Ethics and Standards of Conduct?
• During the analyzing and evaluating step (Practice Standard 300), which would likely occur?
• A CFP certificant has obligations to which groups?
• Step 2 information is best described as which combination?
• Which statement best describes how responsibilities are distributed during implementation?
• Under which circumstances may a CFP certificant reveal confidential information?
• A statement of compensation can use estimates and can be based on reasonable assumptions. Which of the following is true about this statement?
• Practice Standard 600 of the financial planning process addresses which aspect of the planning process?
• What must a CFP professional have to support recommendations for financial strategies?
• Which statement about client funds and commingling is true?
• In establishing and defining the relationship between a planner and a client, which are among the planner's obligations?
• Competence is Principle ____ of the Code of Ethics.
• If a CFP uses third-party research with potential biases, what duty remains?
• After a client’s previous engagement involved selling a collection for $25 million, what should be the CFP professional's next step when re-engaging with the client for personal financial planning?
• For reviewing a colleague's recommendations, what standard should guide the review?
• If a professional offers both comprehensive financial planning and investment management, how should the client relationship be defined?
• With a broker-dealer change, when must a CFP professional inform the CFP Board of a change in address?
• If a CFP professional makes a false statement about a client's portfolio performance, what is the issue and remedy?
• When a legal request or court order requires disclosure of confidential client information, what is the CFP's obligation?
• In CFP ethics, which statement about fiduciary duty and financial gain is correct?
• In determining whether a financial planning engagement exists, which factor is NOT considered?
• What is the recommended approach when a client requests deletion of their data?
• Differentiate between suitability standards and best-interest standards in financial planning.
• Which of the following statements is false regarding the Code of Ethics and Professional Responsibility for CFP professionals?
• Which of the following is not a form of public discipline that the CFP Board may impose?
• What is a typical retention expectation for client records under CFP ethics considerations?
• Regarding CFP marks branding, which statement is correct?
• Which statement regarding gifts is compliant with CFP ethics?
• Which items must be disclosed as changes that affect the professional relationship?
• When a CFP professional loses access to critical client data, what ethical step should be taken before providing advice?
• What is the required continuing education (CE) hours in each 2-year period for CFP certificants?
• Under the utmost good faith standard, which of the following elements would be included in presenting recommendations to a client?
• Which statement about fiduciary duty is true?
• What is the recommended practice for retaining client records after the engagement ends?
• Which of the following is a permissible reason to disclose confidential information without client consent?
• Practice Standards 400-2 series relates to which aspect of the CFP Board Code of Ethics and Professional Responsibility?
• Which statement is NOT a typical responsibility of the planner in the implementation phase?
• Does the Code of Ethics apply to CFP Certification candidates who have not yet passed the exam?
• What is a common framework used to resolve ethical issues?
• The agreement for financial services shall specify which components?
• What is the continuing education obligation for CFP professionals?
• A client offers a high-value gift for a favorable service outcome. How should the CFP respond?
• During a second meeting with a client, another advisor interrupts and suggests moving assets to his broker-dealer. What is the appropriate action for the CFP certificant?
• Are CFP professionals allowed to trade on material nonpublic information obtained through client communications?
• Which statement best describes the ethical approach to conflicts of interest?
• How should a CFP professional handle a client's unrealistic return expectations?
• To what compensation information must a certificant disclose to prospective and current clients?
• Does the CFP Board fiduciary duty apply to all CFP professionals regardless of whether they provide financial planning services?
• What must accompany a written financial plan to demonstrate due care and transparency?
• What is the primary obligation of a CFP professional when providing financial planning services to a client?
• How does the CFP fiduciary standard differ from a suitability standard?
• Are CFP professionals allowed to commingle client funds with their own?
• In Practice Standards 600 Series, monitoring responsibilities should be defined by whom?
• If a person uses the CFP marks in a business name but then becomes uncertified, the public will likely continue to think the person is still certified. True or false?
• What are potential outcomes of a CFP ethics complaint?
• Which statement describes how to establish a financial planning engagement?
• Regarding engagement letters in CFP practice, which statement is true?
• Which statement correctly reflects Step 2 data in the planning process?
• Which line correctly reflects the credential formatting for a CFP professional who is also a registered investment adviser on a business card?
• According to CFP Board guidelines, a financial planning engagement may exist when a client requests which of the following?
• Under which scenario is it permissible to disclose client information to prevent imminent harm to third parties?
• The written disclosures under Rule 2.2 can be made in which way?
• When a client asks you to review his or her tax return for free, what is the appropriate action?
• When using third-party research with potential biases, what is the required practice?
• In the implementation phase of the financial planning process, which item is not a responsibility of the planner?
• In rendering professional services, which items must be disclosed to the client as material information relevant to the professional relationship?
• Which statement accurately describes information sharing during implementation?
• Which is a responsibility of a client?
• Which of the following is not among a financial planner's obligations when establishing the client-planner relationship?
• In a scenario with a difficult referred client, what is the appropriate action?
• During implementation, with whom should the planner coordinate?
• Which of the following is a Principle of the CFP Board of Standards Code of Ethics and Professional Responsibility?
• Tim Fox wants to include the CFP marks as part of a new business entity. Which statement is true?
• In Step 2, data collection covers which of the following?
• Which statement is false about confidentiality and ethics?
• What is the CFP professional's obligation regarding records of client communications and recommendations?
• In establishing the client-planner relationship, which document is required to be in writing to disclose all material information?
• Under what circumstances may a CFP certificant disclose client information to a third party?
• Which of the following are material elements of financial planning?
• Under what circumstances must a CFP disclose confidential client information without the client's consent?
• What authority enforces CFP Board's Code of Ethics and Standards of Conduct?
• Which statement best describes the nature of Step 2 information?
• Are CFP professionals allowed to offer and recommend products they sell if they meet client objectives and the client is aware?
• Which statement is false regarding continuing professional education and degree requirements for CFP certificants?
• When evaluating a replacement investment, which factor is part of the best-interest assessment?
• Which statement is true about tax planning included in financial planning?
• What is required to maintain competence and stay updated on standards and regulations for CFP professionals?
• Can a financial planner be sued for failing to deliver services or plans required by a written agreement with a client?
• Can a CFP practitioner sue the CFP Board?
• What is the standard for advertising CFP services?
• Which statements about the CFP certificant disclosure form are true?
• When you discover a conflict of interest while recommending a life insurance policy to a client who is also a beneficiary of a relative's policy you manage, what is the recommended course of action?
• What does due care require when providing financial planning services?
• Is the time frame of the engagement one of the formal obligations of the financial planner when establishing the relationship?
• Sam Jones, a CFP certificant, is trying to obtain all the necessary information to fulfill his obligation to the prospective client. The client has refused to answer pertinent questions. Sam should do which of the following?
• Is segmented financial planning allowed within the scope of engagement?
• In the ethical decision-making framework, which step involves documenting the rationale for the final decision?
• If a client who initially wants a retirement plan projection then requests a complete financial plan, what is the appropriate next step?
• Under CFP Board practice standards, which statement about the 600 Series and the scope of the engagement is true?
• Which type of information is described as being developed in Step 2 of the financial planning process?
• In case of the advisor's departure, what obligation exists to ensure client continuity?
• Which description best characterizes the data used in Step 2?
• In a flat-fee life policy review scenario, what standard of care applies?
• When there is an emergency that demands rapid advice, what is the ethical approach?
• Which statement about who bears the fiduciary duty under CFP Board standards is most accurate?
• Should a comprehensive financial plan address all major planning areas as they relate to the client?
• Which statement best differentiates ethics rules from practice standards?
• A prospective mutual fund purchaser faces a large capital gain soon. Which questions should you ask?
• Following any emergency action, what should be documented?