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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. All rights reserved. Reproduced with permission.

CE Offering Presented by

Brett Danko, LLC

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.

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.

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 PLANNERTM 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 Board-released 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 500-1.)



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

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.

(L.O.#2)

Presenter

Presentation Notes

The financial planning process can exist when working with the client in any of the subject areas listed in the handout and/or working through the various steps in the financial planning process.

Factors to consider: 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?

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.

(L.O.#1 & #2)

Presenter

Presentation Notes

Financial Planning may be said to occur even if the material elements are provided to a client at different times, over a period of time or are delivered as individual subject areas. There is no requirement for a written financial plan to be provided in order for a client to receive financial planning services.

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

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



(L.O.#1 & #2)

Presenter

Presentation Notes

It is not necessary to provide all of the steps for the service to be considered financial planning. For instance, a client might be interested in managing their own investments. The client may ask the planner to review their data and goals (gathering), provide analysis and develop recommendations which the client then plans to implement on their own.

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

Investment planning

Income tax planning

Retirement planning

Estate planning 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.

(L.O.#1 & #2)

Presenter

Presentation Notes

Speaker notes – Provide examples of the types of issues that are encountered under each subject area and the implications/impact of the financial planning process This ties into when the financial planning relationship exists and will be further discussed with specific client scenarios during the presentation of this slide and subsequent slides

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



(L.O.#3)

Presenter

Presentation Notes

CFP Board Rules of Conduct dictate that 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 financial planning, the certificant owes the client the duty of care as a fiduciary as defined by CFP Board.

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)

Presenter

Presentation Notes

The purpose of the fiduciary standard is to ensure that clients receive unbiased advice that is free of conflicts of interest such as commissions or other benefits. The standard of putting the clients interest before that of the advisor ensures that the clients needs and goals are the main priority of the planning process.

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. All rights reserved. Reproduced with permission.

(L.O.#3)

The parties to the Agreement

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



(L.O.#5)

Presenter

Presentation Notes

According to the Rules of Conduct established by Certified Financial Planner Board of Standards, the elements listed on this slide must be part of a written agreement between the certificant and the client if services provided include financial planning services or the material elements of financial planning.

What must be disclosed to clients? 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)

Presenter

Presentation Notes

The description of compensation arrangements must include – costs and compensation to the certificant and/or the certificant’s employer and the terms under which the certificant and/or the certificant’s employer may receive any other sources of compensation and if so what the sources of these payments are and on what they are based. Conflict of interest disclosures may include any familial, contractual or agency relationship of the certificant or the certificant’s employer that has the potential to materially affect the relationship. Information that could affect the clients decision might include information about the certificant’s areas of expertise that might impact on the clients decision making in defining the scope of the relationship. When defining the relationship if the services include financial planning or material elements of financial planning, the certificant or the certificant’s employer is required to enter into a written agreement governing the financial planning services. This agreement must specify the parties to the agreement, the date of the agreement and its duration, how and on what terms the agreement can be terminated by each party and the services to be provided as part of the agreement. The agreement can consist of multiple written documents so long as they include these requirements. Some legal documents such as those used in compliance with state or federal laws or a document such as the SEC’s Form ADV may satisfy this requirement if it meets these criteria.

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)

Presenter

Presentation Notes

Discuss specific examples of scenarios where compensation disclosure is required and how to provide those disclosures.

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.



(L.O.#6)

Presenter

Presentation Notes

Review examples of conflicts of interest and the two timeframes required for disclosure of conflicts of interest.

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

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.

Presenter

Presentation Notes

Speaker notes – Many of us work with and know individuals interested in attaining CFP® certification. By understanding and communicating the Fitness Standards, we can represent CFP Board’s commitment to ethical standards. For each bulleted item, review specific items found in Section 7 of CFP Board’s Standards of Professional Conduct Handout which deals with Fitness Standards for Candidates and Professionals Eligible for Reinstatement. Also discuss process for appeals as spelled out Section 6.

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 PLANNERTM 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



Presenter

Presentation Notes

Always use capital letters. Never use periods. Always use the ® symbol. Always use with one of CFP Board's approved nouns ("certificant," "professional," "practitioner," "certification," "mark" or "exam") unless directly following the name of the individual certified by CFP Board. Always associate with the individual(s) certified by CFP Board. CERTIFIED FINANCIAL PLANNER™ Always use capital letters or small cap font. Always use the ™ symbol. Always use with one of CFP Board's approved nouns ("certificant," "professional," "practitioner," "certification," "mark" or "exam") unless directly following the name of the individual certified by CFP Board. Always associate with the individual(s) certified by CFP Board. Always reproduce the plaque design from original artwork Never alter or modify the plaque design Always associate with the individual(s) certified by CFP Board Always use the three components of the flame design (flame, "CFP" and ®). Always reproduce the flame design from original artwork. Never alter or modify the flame design. Always associate with the individual(s) certified by CFP Board. Trademark Tagline Whenever possible, use the following tagline in materials that use one of the CFP® marks: Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. If you have questions about CFP Board's trademark usage guidelines, or would like CFP Board to review business materials you are developing that feature the CFP® certification marks, you can always contact them at 800-487-1497 or [email protected]

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)



Presenter

Presentation Notes

Briefly review and define commonly encountered terms

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



Presenter

Presentation Notes

Speaker notes – CFP Board requires adherence to the Code of Ethics by all CFP Board designees through their knowledge of and voluntary compliance with the Principles and Rules

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



Presenter

Presentation Notes

Speaker Notes – Review detail of each of the noted rules and /or – ask for volunteers from participant group to provide the details they know for each of the rules the following slides provide additional details. Provide necessary clarifications and additional practical examples/applications of each rule

Principle 1 – Integrity Principle 2 – Objectivity Principle 3 – Competence Principle 4 – Fairness Principle 5 – Confidentiality Principle 6 – Professionalism Principle 7 - Diligence



Presenter

Presentation Notes

Speaker notes – for each principle provide definition and example – if time allows ask participants to give examples of each P1 - honesty, candor personal adherence to ethical principles P2 – intellectual honesty and impartiality P3 – attaining and maintaining adequate level of knowledge and skill and applying that knowledge and skill to serve clients. Recognizing one’s own limitations. P4 – Fairness – Impartiality, honesty and disclosure of conflicts P5 – Ensuring the security of private information. Confidential nature of client information P6 – Behaving in a dignified and courteous way with clients, professional. Maintaining and enhancing the profession’s image P7 – Providing services promptly and thoroughly

Financial Planning Process Related Practice Standard 1. Establishing and defining a relationship with the client 100-1 Defining the Scope of the Engagement

2. Gathering client data

200-1 Determining a Client’s Personal and Financial Goals, Needs and Priorities 200-2 Obtaining Quantitative Information and Documents

3. Analyzing and evaluating the client’s financial status 300-1 Analyzing and Evaluating the Client’s Information

4. Developing and presenting financial planning recommendations

400-1 Identifying and Evaluating Financial Planning Alternatives 400-2 Developing the Financial Planning Recommendations 400-3 Presenting the Financial Planning Recommendations

5. Implementing the financial planning recommendations 500-1 Agreeing on Implementation Responsibilities 500-2 Selecting Products

6. Monitoring 600-1 Defining Monitoring Responsibilities



(L.O.#4)

Presenter

Presentation Notes

The practice standards establish the level of professional practice that is expected of certificants engaged in financial planning. They provide a framework for professional practice and are not designed to be a basis for legal liability to any third party. As shown in the table above, each practice standard relates to a step in the financial planning process. CFP Board’s Disciplinary and Ethics Commission and Appeals Committee utilize these practice standards to evaluate whether a certificant’s conduct violates the Standards of Professional Conduct established by CFP Board. Review each Practice Standard in general with the group. Provide an explanation of what is included under each standard with real life examples

100-1 – Defining the Scope of the Engagement



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of practice standard 100-1. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. The Certificant and Client must mutually define the scope of the engagement. This is accomplished by: Identifying the services to be provided Disclosing the Certificant’s conflicts of interest Disclosing Certificants compensation arrangements Determining Certificants and Clients responsibilities If applicable establishing the duration of the engagement Provide any additional information to define the scope of the engagement

200 Series – Gathering Client Data

200-1 – Determining a Client’s Personal and Financial Goals, Needs and Priorities

200-2 Obtaining Quantitative Information and Documents



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of the 200 series practice standards. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. Gathering the quantitative and qualitative client data with an emphasis on the goals of the goals, needs and priorities of the client. The gathering step includes information such as risk tolerance, experience with other advisors, investment statements, insurance policies in effect, etc.

300-1 Analyzing and Evaluating Client Information



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of the 300 series practice standards. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. The goal is to gain a thorough understanding of the client's financial situation and evaluate to what extent the client’s goals, needs and priorities can be met by the client’s resources and current course of action. This takes into account the client’s personal goals such as retirement, age, life expectance, budget, risk factors and other special circumstances as well as inflation, tax rates and investment returns.

400 Series

400-1 – Identifying and Evaluating Financial Planning Alternatives

400-2 – Developing the Financial Planning Recommendations

400-3 Presenting the Financial Planning Recommendations



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of the 400 series practice standards. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. This practice standard is a 3 step process. First it takes into account first identifying and evaluating the planning alternatives and coming up with various solutions. Secondly, the Certificant develops the recommendations best suited to the meeting the Client’s goals, needs and priorities taking into account everything identified from Practice Standard 400-1. Lastly, these recommendations are communicated to the client to assist the client in making an informed decision.

500 Series

500- 1 – Agreeing on Implementation Responsibilities

500-2 – Selecting Products



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of the 500 series practice standards. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. The Certificant and Client mutually agree on the implementation responsibilities consistent with the scope of the engagement. This could include identifying what needs to be implemented, determining whether the Certificant or Client will do it, refer or coordinate with other professionals.

600-1 – Defining Monitoring Responsibilities



(L.O.#4)

Presenter

Presentation Notes

Discuss the implications of the 600 series practice standards. Review the steps, individuals (public and professional) and information types that a planner may encounter when working within these standards. The Certificant and Client decide when and how best to monitor the client situation in the future. There is no specified time mentioned in the standards such as quarterly or annually just that it needs to be discussed with the Client to determine what is best in each situation.

Review of Select Case Histories Focus of the case histories is Fiduciary Duty and

Disclosure 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”



Presenter

Presentation Notes

Speaker notes –Depending upon the time remaining, select 2 or 3 cases from the case study handout document to explore with the group. Review the details of each case, identify the Rule Violations, lead a 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. All rights reserved. Reproduced with permission.

If you’ve dialed in, please mute your phone · Certified Financial Planner Board of Standards,...

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