Your manager says, "Push the proprietary fund, bonuses depend on it." The fund charges 0.85% with no track record. A Vanguard alternative charges 0.14% with 15 years of data. If you follow the manager, you just failed the ethics section. One word controls everything a CFP professional does: fiduciary.
The Code of Ethics is six commitments. They are aspirational and they set the tone for everything else, but a disciplinary case is not charged under them. That is what the Standards of Conduct are for. A CFP professional commits to:
- Act with honesty, integrity, competence, and diligence
- Act in the client's best interests
- Exercise due care
- Avoid or disclose and manage conflicts of interest
- Maintain the confidentiality and protect the privacy of client information
- Act in a manner that reflects positively on the financial planning profession and CFP certification
TRAP: Older material lists seven or eight named "principles" (Integrity, Objectivity, Competence, Fairness, Confidentiality, Professionalism, Diligence). Those belong to the Standards of Professional Conduct, which CFP Board replaced on October 1, 2019.
Common mistakes
- Treating disclosure as a complete solution. A planner reveals a conflict and proceeds with a conflicted recommendation. Candidates pick "obligation satisfied by written disclosure." Wrong. Disclosure plus independent evaluation is required. The answer that says disclosure alone is sufficient is almost always the trap.
- Prioritizing one spouse's secrecy in a joint engagement. One spouse reveals hidden debts and asks the planner not to tell. Candidates pick "maintain confidentiality for the revealing spouse." Under a joint engagement, the planner must explain mutual disclosure obligations. If the spouse refuses, withdraw. The trap answer says confidentiality is absolute.
- Answering from the retired principle list. Objectivity and Fairness were principles under the pre-2019 Standards of Professional Conduct and do not exist in the current Code. A choice naming one is wrong on its face.
Bottom line
- Fiduciary duty overrides employer directives with no exceptions; the client's interests come above your own and your firm's.
- Disclosure alone never cures a conflict; the avoid-then-manage hierarchy applies and you must still independently act in the client's best interest.
- Confidentiality covers even confirming someone is your client; the only exceptions are legal compulsion, written consent, and self-defense.
- Joint engagements create mutual disclosure; no co-client can demand secrecy about material information.
Exam shortcut
Disclosure trap: When a scenario shows a planner who disclosed a conflict and then proceeded, any answer saying disclosure alone is sufficient is almost always wrong. The correct answer requires disclosure plus independent evaluation. Confidentiality trap: Any answer involving sharing client information without explicit consent is a violation, even with a spouse, family member, or employer.
The full lesson (about 2,693 words, 18 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- A.1
Browse all free CFP lessons or jump into free CFP practice questions.