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Nine Simple Steps to Avoiding a CFP Rule Violation

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

9. Call the CFP Board for Backup


If you are a CFP, but work for a firm whose sale practices are inconsistent with that of the CFP Board, contact Shaw. He volunteered to talk with the compliance officer at firm and work through any issues.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

8. Remember: You Are in Control of Your Business


If you want to stop working with a client, terminate the agreement and stop serving the client. This is your business.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

7. Be Specific With Clients


If you are going to focus on one area of financial planning, say tax planning, be specific about the goal.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

6. Lay it All Out in Writing


Draft an agreement that spells out the goals, timelines and expectations of the financial planning arrangement. It could be in the form of a contract, an engagement letter or fee that makes all of the objectives clear.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

5. Explain and Explain Again


Make sure the client understands what services will be provided and what is occurring during the entire process.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

4. Integrate


Integrate the financial planning process with subject areas including education, tax, investments, risk management and cash flow management. Otherwise, financial planning is not occurring, Fuller said.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

3. Disclose All Forms of Compensation


Collecting commissions from term insurance, variable universal life policies or variable annuities? Let the client know. Also disclose soft-dollar arrangements, or non-cash compensation, between the firm, its principals and outside parties like vendors and suppliers.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

2. Disclose and Effectively Manage All Conflicts of Interest


Whether it involves the sale of a proprietary mutual fund, trading from the inventory of the firm or finder’s fee for client referrals, the client should be aware of any activity that potentially opens a conflict.

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

1. Follow the Six Steps of the Financial Planning Process, as Laid Out by the CFP Board


• Establish and define the client-planner relationship

• Gather client data, including goals

• Analyze and evaluate the client’s financial status

• Develop and present financial planning recommendations or alternatives, or both

• Implement the recommendations

• Monitor the financial planning recommendations

Nine Simple Steps to Avoiding a CFP Rule Violation Nine Simple Steps to Avoiding a CFP Rule Violation

Nine Simple Steps to Avoiding a CFP Rule Violation


Financial advisors who have earned the CFP credential have worked hard build to a client base, and establish a thriving practice. So, why derail that with a letter of admonition, a suspension of the right to use the mark, or a complete revocation, which is nearly impossible to get back?


In a recent Webinar moderated by Michael Shaw, the CFP Board of Standard’s managing director of professional review and legal; Grace C. Fuller; and Dan Candura, advisors offered some simple tips to avoiding getting red flags from the board.

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