4/25/2017. If you ve dialed in, please mute your phone. CE Offering Presented by Brett Danko, LLC. Also referred to as personal financial planning

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1 If you ve dialed in, please mute your phone CE Offering Presented by Brett Danko, LLC CFP Board's Code of Ethics and Professional Responsibility, Rules of Conduct, Financial Planning Practice Standards, Fitness Standards for Candidates and Registrants and Anonymous Case Histories are the property of CFP Board and may not be resold, republished or copied without the prior consent of CFP Board. Copyright 2015 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission. CFP Board's Code of Ethics and Professional Responsibility, Rules of Conduct, Financial Planning Practice Standards, Fitness Standards for Candidates and Registrants and Anonymous Case Histories are the property of CFP Board and may not be resold, republished or copied without the prior consent of CFP Board. Copyright 2015 Certified Financial Planner Board of Standards, Inc. This 2 hour program satisfies CFP Board requirements for mandatory Ethics Continuing Education. Following successful completion of the program, Brett Danko, LLC will report your course completion information to CFP Board. Certified Financial Planner Board of Standards, Inc. (CFP Board) is a regulatory organization founded in 1985 to benefit the public by establishing and enforcing education, examination experience and ethics requirements for CFP certificants.^ CFP Board has exclusive authority to determine who may use the CFP, CERTIFIED FINANCIAL PLANNER TM and certification marks (the CFP marks) in the United States.^ CFP Board conditions the permissions it grants individuals to use these marks on their agreement to abide by certain terms and conditions specified by CFP Board.^ Today s seminar will provide an overview of the Standards of Professional Conduct including the Code of Ethics and Professional Responsibility, an in depth discussion of one of CFP Board s practice standards and discussion of CFP Boardreleased Anonymous Case Histories. ^Source CFP Board website Upon completion of this program participants will be able to: 1. Define and discuss a financial planning engagement, material elements of financial planning, and the financial planning process. 2. Analyze specific fact patterns to determine if a financial planning relationship exists. 3. Differentiate between the standards of care set forth in Rules 1.4 and 4.5 of the Rules of Conduct, and apply each standard of care to specific factual situations. 4. Apply each Practice Standard set forth in the Financial Planning Practice Standards to a hypothetical financial planning engagement. 5. Identify the information that must be disclosed to the client in writing by a CFP professional who is engaged in a financial planning relationship or providing material elements of financial planning. 6. Define the required information that must be disclosed to clients and prospective clients, when that information must be disclosed, and apply each disclosure requirement to specific factual situations. (This includes but is not limited to the compensation and conflict-of-interest disclosure requirements set forth in Rule 2.2 of the Rules of Conduct and Practice Standards 100-1, 400-3, and ) (L.O.#2) Also referred to as personal financial planning The process of determining whether and how an individual can meet life goals through the proper management of financial resources Financial planning is an integrated process focused on certain subject areas and material elements Inc. 1

2 Factors to consider: (L.O.#1 & #2) What is the client s understanding and intent in engaging the certificant? To what degree are multiple financial planning subject areas involved? How comprehensive is the data gathering? What is the breadth and depth of the recommendations? Inc. This process typically includes, but is not limited to, some or all of the following six steps: 1. Establishing and defining the client-planner relationship. 2. Gathering client data including goals (L.O.#1 & #2) 3. Analyzing and evaluating the client s current financial status 4. Developing and presenting recommendations and/or alternatives 5. Implementing the recommendations 6. Monitoring the recommendations Inc. The following basic subjects are typically included in the financial planning process: Financial statement preparation and analysis (including cash flow analysis/planning and budgeting) Insurance planning and risk management Employee benefits planning (L.O.#1 & #2) (L.O.#3) Fiduciary One who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client Investment planning Income tax planning Retirement planning Estate planning Inc. (L.O.#3) The fiduciary standard requires that CFP Professionals put their clients interests above their own and act in the best interest of the client within the financial planning process. (L.O.#3) There is a difference between suitable and in the client s best interest A particular investment or product may be suitable for a client but may not necessarily be in their best interest. CFP Board's Code of Ethics and Professional Responsibility, Rules of Conduct, Financial Planning Practice Standards, Fitness Standards for Candidates and Registrants and Anonymous Case Histories are the property of CFP Board and may not be resold, republished or copied without the prior consent of CFP Board. Copyright 2015 Certified Financial Planner Board of Standards, Inc. 2

3 The parties to the Agreement (L.O.#5) The date of the Agreement and its duration How and on what terms each party can terminate the Agreement The services to be provided as part of the Agreement What must be disclosed to clients? (L.O.#6) An accurate and understandable description of the compensation arrangements offered. A general summary of the likely conflicts of interest between the client and the certificant, the certificant s employer and affiliates or third parties. 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. Contact information for the certifiant (and their employer, if applicable) Disclosures must be in writing if financial planning services or material elements of financial planning are to be provided. (L.O.#6) When must disclosures be provided? Disclosures must be provided to a client at the beginning of the engagement and must provide a general description of how the client would pay for all of the services of the CFP Professional. Disclosures must also be provided at the time the CFP Professional makes specific recommendations to the client/prospective client. (L.O.#6) Any potential conflicts of interest must be communicated to the client. Practicing appropriate disclosure of conflicts of interest requires: A disclosure given at the beginning of the client engagement providing a general description of the CFP Professional s conflicts of interest. A subsequent disclosure must be provided any time a new conflict arises. Inc. Established by CFP Board to ensure that a candidate s prior conduct would not reflect poorly on the profession or the CFP marks. Additionally, serves as notice to individuals interested in pursuing CFP certification that certain conduct may prevent them from attaining the certification or may require individual petition and review by the Disciplinary and Ethics Commission These standards also apply to Professionals Eligible for Reinstatement (PER) (formerly referred to as registrants) Conduct Deemed Unacceptable Conduct Deemed a Presumptive Bar Petitioning the Disciplinary and Ethics Commission. Results in one of the following outcomes: Grant Deny but may re-apply Deny 3

4 Please refer to the Guide to Use of the CFP Certification Marks in your handouts for a discussion of CFP Board s guidelines 1. Rules for Proper Usage of the CFP Mark 2. Rules for Proper Usage of the CERTIFIED FINANCIAL PLANNER TM Mark 3. Rules for Proper Usage of the Plaque Design 4. Rules for Proper Usage of the Flame Logo 5. Using CFP Board s Tagline CFP Board Candidate for CFP Certification Certificant Certificant s Employer Client Commission Compensation Conflict of interest Fee-Only Fiduciary Financial planning engagement Financial planning practitioner Personal financial planning or financial planning Personal financial planning process or financial planning process Personal financial planning subject areas or financial planning subject areas Professionals Eligible for Reinstatement (PER) Purpose to establish the highest principles and standards. Expresses the ethical and professional ideals certificants and registrants are expected to display in their professional activities. Seven Principles form the basis of the Rules of Conduct Binding on all certificants regardless of title, type of employment, position or method of compensation. Govern all those who have the right to use the CFP marks, whether or not the marks are actually used. Due to the wide variety of services performed by certificants, some of the rules may not be applicable. It is incumbent upon the certificant to be knowledgeable about and adherent to the rules that apply to the services they provide. 1. Defining the Relationship with the Prospective Client or Client 2. Information Disclosed To Prospective Clients and Clients 3. Prospective Client and Client Information and Property 4. Obligations to Prospective Clients and Clients 5. Obligations to Employers 6. Obligations to CFP Board Principle 1 Integrity Principle 2 Objectivity Principle 3 Competence Principle 4 Fairness Principle 5 Confidentiality Principle 6 Professionalism Principle 7 - Diligence 4

5 Financial Planning Process Related Practice Standard 1. Establishing and defining a relationship with the client Defining the Scope of the Engagement 2. Gathering client data Determining a Client s Personal and Financial Goals, Needs and Priorities Obtaining Quantitative Information and Documents Defining the Scope of the Engagement 3. Analyzing and evaluating the client s financial status Analyzing and Evaluating the Client s Information Identifying and Evaluating Financial Planning Alternatives 4. Developing and presenting financial planning recommendations 5. Implementing the financial planning recommendations Developing the Financial Planning Presenting the Financial Planning Agreeing on Implementation Responsibilities Selecting Products 6. Monitoring Defining Monitoring Responsibilities 200 Series Gathering Client Data Determining a Client s Personal and Financial Goals, Needs and Priorities Analyzing and Evaluating Client Information Obtaining Quantitative Information and Documents 400 Series 500 Series Identifying and Evaluating Financial Planning Alternatives Developing the Financial Planning Agreeing on Implementation Responsibilities Selecting Products Presenting the Financial Planning 5

6 600-1 Defining Monitoring Responsibilities Review of Select Case Histories Focus of the case histories is Fiduciary Duty and Dislosure Identification of Rules Violations Discussion of how the CFP certificant could have used the Practice Standards to avoid the violations Review the Commission s Analysis and Conclusions Regarding Rule Violations CFP Board's Code of Ethics and Professional Responsibility, Rules of Conduct, Financial Planning Practice Standards, Fitness Standards for Candidates and Registrants and Anonymous Case Histories are the property of CFP Board and may not be resold, republished or copied without the prior consent of CFP Board. Copyright 2015 Certified Financial Planner Board of Standards, Inc. 6