CFP Board Standards of Professional Conduct Ethics CE Presentation CE Offering Presented by Brett R. Danko, CFP®, CRPC®

Today’s Schedule 10:00 – 10:05 a.m. - Welcome/Overview 10:05 – 10:10 a.m. – Review of Learning Objectives 10:10 – 10:25 a.m. – Overview of Financial Planning (definition, material elements and process, subject areas) 10:25 – 10:30 a.m. - Review of Updated Fitness Standards for Candidates and Registrants 10:30 – 10:35 a.m. – Use of Marks / Terminology 10:35 – 10:45 a.m. – Review of Code of Ethics and Professional Responsibility/Rules of Conduct 10:45 – 10:50 a.m. – Required Elements of a Written Agreement 10:50 – 10:55 a.m. – Disclosure Requirements 10:55 – 11:00 a.m. – Elements and Applications of the Fiduciary Standard 11:00 – 11:10 a.m. – Break 11:10 – 11:35 a.m. – Detailed Review of Financial Planning Process and Related Practice Standards Including Detailed Focus on Standards 200-1 and 200-2 11:35 – 12:00 p.m. – Discussion of Anonymous Case Histories 12:00 p.m. – Questions/Wrap -up

Overview 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. Please be sure you sign in and sign out. Please be sure all of your contact information, CFP Certificant number and Last 4 digits of your SSN are listed correctly on your participant form. Please complete a course evaluation form before you leave today.

Overview 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

Learning Objectives Upon completion of this program participants will be able to: Demonstrate an understanding of, and be able to define financial planning, the financial planning process and financial planning subject areas. Describe the material elements of financial planning. Determine if a CFP® professional is providing financial planning or material elements of financial planning. Demonstrate an understanding of the required elements of a written agreement when financial planning services are provided. Articulate disclosure requirements and apply disclosure requirements to their practices. Define and outline elements of the fiduciary standard and know when it applies. Demonstrate an understanding of the Standards of Professional Conduct including the Code of Ethics and Professional Responsibility and Candidate Fitness Standards

Financial Planning 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

How do we know when a certificant is providing the Material Elements of Financial Planning? 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? 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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

An Overview of the Financial Planning Process This process typically includes, but is not limited to, some or all of the following six steps: Establishing and defining the client-planner relationship. Gathering client data including goals Analyzing and evaluating the client’s current financial status Developing and presenting recommendations and/or alternatives Implementing the recommendations Monitoring the recommendations 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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Financial Planning Subject Areas 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 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 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Updated Fitness Standards for Candidates and Registrants 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 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Updated Fitness Standards for Candidates and 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 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 Fitness Standards for Candidates and Registrants handout. Also discuss process for appeals as spelled out in document. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Guide to Use of the CFP® Certification Marks Please refer to the “Guide” in your handouts for a discussion of CFP Board’s guidelines Rules for Proper Usage of the CFP® Mark Rules for Proper Usage of the CERTIFIED FINANCIAL PLANNERTM Mark Rules for Proper Usage of the Mark Using CFP Board’s Tagline When in doubt – check with CFP Board’s trademark department trademark@CFPBoard.org Must be clearly associated with the individual(s) certified by the board, all caps, no periods. Must have ® in superscript or (R). Can not be used as a parenthetical abbreviation. Must be followed by professional, practitioner, certificant, certification, mark or exam except when immediately following a certificant’s name.can not be used as a possessive, plural or in an e-mail address. When used on websites, advertisements, promotional materials CFP Board’s tagline must be used. Rules for item #2 – must be clearly associated with individuals certified by CFP Board. Must be all caps or small cap font. Must always have a symbol TM in superscript. No parenthetical use. Must be followed by one of the 6 previously discussed nouns. Form of the words may not be altered or changed, no plural or possessive, not for use in e-mail address, When used on websites, advertisements, promotional materials CFP Board’s tagline must be used. All componets of mark #3 must be used together at all times. Must be used clearly associted with an individual certificed by CFP Board. Al reproductions must be made from artwork provided by CFP Board. When used on websites, advertisements, promotional materials CFP Board’s tagline must be used. Must be used when featuring the CFP(R) marks on websites, in advertisements and on promotional materials. Ok to leave off of biz cards, letterhead and notepads. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Terminology 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 Registrant Briefly review and define commonly encountered terms 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Code of Ethics and Professional Responsibility 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 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 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Rules of Conduct Defining the Relationship with the Prospective Client or Client Information Disclosed To Prospective Clients and Clients Prospective Client and Client Information and Property Obligations to Prospective Clients and Clients Obligations to Employers Obligations to CFP Board 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 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Required Elements of a Written Agreement 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 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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Disclosure Requirements 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. 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. State and Federal or other regulatory requirements such as an ADV would fulfill this requirement. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Elements and Applications of the Fiduciary Standard 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 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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Principles Principle 1 – Integrity Principle 2 – Objectivity Principle 3 – Competence Principle 4 – Fairness Principle 5 – Confidentiality Principle 6 – Professionalism Principle 7 - Diligence 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 aplllying 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 an denhancing the profession’s image P7 – Providing services promptly and thoroughly 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Overview of Financial Planning Process and Related Practice Standards 1. Establishing and defining a relationship with the client 100-1 Defining the Scope of the Engagement 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 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 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Focus on Practice Standards 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 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. 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© 2012 Certified Financial Planner Board of Standards, Inc. All rights reserved. Reproduced with permission.

Anonymous Case Histories Review of Select Case Histories (see Handout) 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”

Questions / Wrap-up