CFP Ethics Practice Test

These questions are part of the practice quiz. Start practicing

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