GUIDELINES FOR
PROFESSIONAL
ETHICAL CONDUCT
Society of Financial Services Professionals – Central
Illinois Chapter
Society of Financial Services
Professionals
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A multidisciplinary network of credentialed financial
professionals.
Committed to providing education opportunities
National website – www.financialpro.org
Chapter website – www.fsp-centralil.org
Purpose
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Understand the CFP Board Code of Ethics &
Professional Responsibility.
Understand relationship between CFP Board Code
and FSP Code.
Foster awareness of ethical issues in the profession.
Resolve “gray” areas using ethical decision making
skills.
Agenda
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Ethics and Professional Responsibility
CFP Board Code of Ethics & Professional
Responsibility
Comparison of CFP Board Code and FSP Code
Ethical Decision Making Tool
Case Application
Common Sense Ethics
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Doing the Right Thing: Rules, Principles and Respect
Character: Values and Identity
Sound Judgment: Using your Head
Professional Ethics
CHARACTER
SOUND
JUDGMENT
INDIVIDUAL
PERSONAL
VALUES
and
IDENTITY
DECISION
MAKING SKILLS
PROFESSIONAL
SOCIETY
VALUES
TRADITIONS
LEADERSHIP
STANDARDS
PRACTICES
RESOURCES
Copyright 1993 Resources for Ethics and Management
CFP Board Code of Ethics
& Professional Responsibility
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Applicability of the Code
Scope of the Code
Compliance & Terminology
Principles
Rules of Conduct and Practice Standards
Quiz
Preamble & Applicability
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Source = CFP Board of Standards
Principles & Rules guide behavior
Applies to all CFP Board certificants and registrants
Accepting right to use CFP marks = Agreeing to be
bound by Code
Composition & Scope
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Two components: Principles & Rules
 Building
blocks of Code
 Neither define behavior for purposes of civil liability
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Principles
 General
statements of ethical ideals
 Aspirational
 Apply to all CFP Board certificants
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Rules
 Practical
and specific to given situations
 Not all Rules apply to all CFP Board certificants
Principles
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Aspirational standards of exemplary professional
conduct
CFP Board certificants strive toward that level of
professional conduct
1. Integrity
5. Confidentiality
2. Objectivity
6. Professionalism
3. Competence
7. Diligence
4. Fairness
Principles 1, 2 and 3
1. INTEGRITY: A CFP Board certificant shall offer
and provide professional services with integrity.
2. OBJECTIVITY: A CFP Board certificant shall be
objective in providing professional services to
clients.
3. COMPETENCE: A CFP Board certificant shall
provide services to clients competently & maintain
the necessary knowledge and skill to do so in those
areas in which he/she is engaged.
Principles 4 and 5
4. FAIRNESS: A CFP Board certificant shall perform
professional services in a manner that is fair and
reasonable to clients, principals, partners and
employers, and shall disclose conflicts of interest in
providing such services.
5. Confidentiality: A CFP Board certificant shall not
disclose confidential client information without the
specific consent of the client unless
In response to legal process
 To defend against charges of wrongdoing
 In connection with a civil dispute
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Principles 6 and 7
6. PROFESSIONALISM: A CFP Board certificant’s
conduct in all matters shall reflect credit upon the
profession.
7. DILIGENCE: A CFP Board certificant shall act
diligently in providing professional services.
Test Your Knowledge
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Bud Boaster, CFP, has a habit of bragging about the
net worth of his high-end clients.
Polly Procrastinator, CFP, is known for her
extraordinary expertise in asset allocation, but she
also has a reputation for not returning calls and
missing deadlines.
Charlie Chatter, CFP, heard an unsubstantiated
rumor about the financial stability of a local brokerdeal firm. Without further investigation, he shared
this information with 2 colleagues, 3 clients, and his
barber.
Compliance
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All CFP Board certificants must comply
Drivers for compliance:
 Understanding/knowledge
of Code
 Influences of fellow professionals & public opinion
 Disciplinary proceedings
FSP Code of Professional Responsibility
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Background
Preamble
Canons
Rules and Applications
Disciplinary Procedures
Background
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A professional
 Possesses knowledge or expertise
 Serves others
 Works to enhance reputation
 Self-regulates
FSP Code introduced in 1961, revised in 1988 and again in
2000.
Changes in financial services
 Multiple credentials
 Services beyond insurance
 New ethical challenges
Preamble
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Introduces the Code
All FSP members are automatically bound by its
provisions
Lofty aspirations (Canons) and enforceable minimum
standards of ethical conduct (Rules)
Diversity of membership
Advisory opinions
Canons
Aspirational standards of exemplary professional
conduct
 Members strive toward that level of professional
conduct
 Significant similarity to CFP Board Code
1. Fairness
5. Diligence
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2. Competence
6. Professionalism
3. Confidentiality
7. Self-Regulation
4. Integrity
Canons 1, 2 and 3
1. FAIRNESS: A member shall apply the “Golden
Rule” to all he or she serves and especially avoid
harm to others.
2. COMPETENCE: A member will earn a high-level of
knowledge and will continually improve one’s
competence.
3. CONFIDENTIALITY: A member will treat
information obtained with the highest level of
confidentiality.
Canons 4, 5 and 6
4. INTEGRITY: A member shall always place the client’s
interest above his/her own.
5. DILIGENCE: A member must apply his or her skills in
a prompt and thorough manner.
6. PROFESSIONALISM: A member has the
responsibility to cooperate with other professionals
and to enhance the profession’s public image.
Canon 7
7. SELF-REGULATON: A member will uphold and
facilitate enforcement of the Code of Professional
Responsibility.
Code Comparison
Certified Financial Planner
Board of Standards
Society of Financial Service
Professionals
1. Integrity
1. Fairness
2. Objectivity
2. Competence
3. Competence
3. Confidentiality
4. Fairness
4. Integrity
5. Confidentiality
5. Diligence
6. Professionalism
6. Professionalism
7. Diligence
7. Self Regulation
Six Questions Guidelines
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Why is this bothering me?
Who else matters? Clients? Carriers? Professional
Colleagues? Employees? Regulators?
What is my responsibility?
What are the ethical concerns? What Principles/Canons &
Rules of the Codes apply?
Who can I ask for advice?
Am I being true to myself? To the values of CFP Board/FSP?
Adapted with permission from Michael Rion, The Responsible Manager, Copyright 1996.
BREAK (10 minutes)
Case Discussion Instructions
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Read the case.
Select a discussion leader and a recorder who will
give a brief report to the whole group.
Discuss and answer the questions at the end of the
case.
Agree on key points to present to the whole group.
Financial Planning with Linda
Things to Discuss
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Updating our wills
Rebalancing our taxable investment portfolio
Trusts – do we need something for the kids?
Long term care insurance – now or later?
Summary for Case #1
All Things to All People?
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Refrain from giving advice in areas beyond the
member’s expertise
Abide by all local, state and national laws and
regulations affecting professional activities
Summary for Case #2
What Would You Like to Know?
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Treat the client as you would like to be treated
including disclosure of important aspects of the
professional relationship.
Establish confidentiality at the outset.
Maintain an open, honest relationship.
Summary for Case #3
A Little Knowledge
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Act only in accordance with authority given by
client.
Abide by applicable laws, rules and regulations.
Summary for Case #4
Is the Customer Always Right?
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Treating others as you would want to be treated and
avoiding conflict of interest argue for raising the
401(k) option.
Identifying the 401(k) option suggests competent,
objective financial planning.
Honesty builds positive business relationships.
BREAK (10 minutes)
Summary for Case #5
What Really Counts?
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Treat others as we want to be treated, avoid
conflicts of interest and disclose relevant
information.
Stay current with the latest business models.
Raise any concerns about transactional approaches
in appropriate professional circles.
Summary for Case #6
Breaking Up is Hard to Do
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Treat all clients as you would like to be treated.
Honor your promises and explain limitations and
challenges honestly.
Anticipate the problem and seek creative solutions
with advice from others.
Summary for Case #7
Mind Your Own Business?
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Offer your best advice to the client, even if it is
uncomfortable.
Honor confidentiality of the client relationship in
talking to other family members.
Make strong efforts to ensure client realizes
implications of decision.
Summary for Case #8
The Road Not Taken
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Ensure that recommendations do not cause harm; if
you did cause harm, help to correct it.
Make sure recommendations are appropriate and
keep up to date with client needs.
Cooperate fully in any ethics complaint investigations
Summary
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Read and understand the Codes.
Use the Codes for guidance.
Use the Six Questions Guidelines too.
Ask for help!
Share questions, ideas, information, application
examples.