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A.1 Code of Ethics and Standards of Conduct

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Certified Financial Planner CFP

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1 A. Professional Conduct and Regulation

A.1 Code of Ethics and Standards of Conduct A.1.1 The Six Ethical Principles A.2 Procedural Rules and Discipline A.2.1 Fitness Standards for Candidates A.3 Financial Institutions Overview A.3.1 Broker-Dealers vs. RIAs A.4 SEC and Securities Regulation A.4.1 FINRA and Broker-Dealer Regulation A.4.2 State Securities Regulation A.5 Consumer Protection Laws A.5.1 Privacy and Confidentiality Requirements A.6 Fiduciary Duty and Application

2 B. General Principles of Financial Planning

B.7 The Financial Planning Process B.7.1 Establishing the Client Relationship B.7.2 Gathering Client Data and Goals B.8 Personal Financial Statements B.8.1 Key Financial Ratios B.9 Cash Flow Management B.9.1 Emergency Fund Planning B.10 Debt Management Strategies B.10.1 Mortgage and Home Financing B.11 Economic Concepts B.11.1 Planning for Inflation B.12 Time Value of Money Concepts B.12.1 TVM Calculations and Applications B.12.2 Loan Amortization B.13 Education Needs Analysis B.14 Education Savings Vehicles B.14.1 529 Plans In-Depth B.15 Education Funding Strategies B.16 Gift/Income Tax Strategies

3 C. Risk Management and Insurance Planning

C.17 Principles of Risk and Insurance C.17.1 Risk Management Process C.18 Analysis of Risk Exposures C.19 Health Insurance Fundamentals C.19.1 Types of Health Insurance Plans C.20 Disability Income Insurance C.20.1 Disability Policy Features C.21 Long-Term Care Insurance C.22 Annuities Overview C.22.1 Fixed vs. Variable Annuities C.23 Life Insurance Fundamentals C.23.1 Types of Life Insurance C.24 Business Owner Insurance Solutions C.25 Insurance Needs Analysis C.26 Insurance Policy and Company Selection

4 D. Investment Planning

D.27 Equity Securities D.27.1 Fixed Income Securities D.27.2 Mutual Funds and ETFs D.27.3 Taxation of Investment Vehicles D.28 Systematic Risk D.28.1 Unsystematic Risk D.29 Economic and Market Cycles D.30 Measures of Risk and Return D.30.1 Investment Performance Measures D.31 Asset Allocation Strategies D.31.1 Portfolio Diversification D.32 Bond and Stock Valuation D.32.1 Stock Valuation Models D.33 Investment Policy Statement D.33.1 Modern Portfolio Theory D.34 Active vs. Passive Investing D.34.1 Common Investment Strategies D.35 Alternative Investments D.35.1 Options and Derivatives

5 E. Tax Planning

E.36 Income Tax Fundamentals E.36.1 Filing Status and Tax Brackets E.37 Types of Income E.37.1 Deductions and Credits E.37.2 Capital Gains and Losses E.38 Business Entity Taxation E.38.1 Self-Employment Tax E.39 Taxation of Trusts and Estates E.40 Tax Reduction Strategies E.40.1 Retirement Account Tax Strategies E.41 Property Transactions E.41.1 Basis Rules for Acquired Property E.42 AMT and NIIT E.42.1 Special Tax Situations E.43 Charitable Giving Strategies

6 F. Retirement Savings and Income Planning

F.44 Retirement Needs Analysis F.44.1 Sources of Retirement Income F.45 Social Security Benefits F.45.1 Social Security Claiming Strategies F.45.2 Medicare Planning F.46 Eldercare and Special Needs Planning F.47 Qualified Plan Overview F.47.1 Defined Benefit Pension Plans F.47.2 Defined Contribution Plans F.48 Eligibility and Vesting F.48.1 Coverage and Discrimination Testing F.48.2 Contribution and Benefit Limits F.48.3 401(k) Plan Features F.49 Non-Qualified Deferred Compensation F.49.1 Executive Compensation Plans F.50 Retirement Plan Selection for Businesses F.50.1 Individual Retirement Accounts F.51 Distribution Rules F.51.1 Required Minimum Distributions F.52 Retirement Income Strategies F.52.1 Tax-Efficient Withdrawal Strategies F.53 Business Succession Planning

7 G. Estate Planning

G.54 Property Titling and Beneficiary Designations G.54.1 Beneficiary Designations G.55 Strategies to Transfer Property G.55.1 Lifetime Gifting Strategies G.56 Wills and Estate Documents G.56.1 Powers of Attorney G.56.2 Advance Directives and Healthcare Documents G.57 Federal Gift Tax G.57.1 Federal Estate Tax G.57.2 Generation-Skipping Transfer Tax G.58 Sources for Estate Liquidity G.58.1 Life Insurance for Estate Liquidity G.59 Trust Fundamentals G.59.1 Revocable Living Trusts G.59.2 Irrevocable Trusts G.59.3 Trust Income Taxation G.60 Marital Deduction Planning G.60.1 QTIP Trusts G.60.2 Portability of Estate Tax Exemption G.61 Intra-family and Business Transfer Techniques G.61.1 Family Limited Partnerships G.61.2 GRATs and IDGTs G.62 Postmortem Estate Planning Techniques G.62.1 Disclaimer Planning G.62.2 Estate Tax Elections G.63 Planning for Divorce and Unmarried Couples G.63.1 Estate Planning for Unmarried Couples G.63.2 Planning for Blended Families G.64 Planning for Special Needs and Circumstances G.64.1 Special Needs Trusts G.64.2 ABLE Accounts

8 H. Psychology of Financial Planning

H.65 Client and Planner Attitudes, Values, Biases H.65.1 Money Scripts and Money Attitudes H.65.2 Planner Self-Awareness H.66 Behavioral Finance H.66.1 Cognitive Biases H.66.2 Emotional Biases H.66.3 Heuristics and Mental Accounting H.67 Sources of Money Conflict H.67.1 Couples and Money Conflict H.67.2 Family and Intergenerational Money Conflict H.68 Principles of Counseling H.68.1 Therapeutic Techniques in Financial Planning H.68.2 Professional Boundaries and Referrals H.69 General Principles of Effective Communication H.69.1 Listening and Questioning Skills H.69.2 Managing Difficult Conversations H.69.3 Non-Verbal Communication H.70 Crisis Events with Severe Consequences H.70.1 Death and Divorce H.70.2 Job Loss and Health Crisis H.70.3 Sudden Wealth and Sudden Loss H.70.4 Natural Disasters and Traumatic Events

A.1 Code of Ethics and Standards of Conduct

Key Takeaways Explain This Topic AI

CFP Board's Code of Ethics contains six aspirational principles; the Standards of Conduct contain enforceable duties organized into sections A through F

When providing Financial Advice, CFP professionals owe a fiduciary duty with three components: Loyalty, Care, and Follow Client Instructions

A client is 'engaged' when they first rely on the CFP professional's advice—not when a contract is signed or payment is made

Material conflicts of interest must be either avoided OR disclosed AND managed—disclosure alone is insufficient

Last updated: January 2026

CFP Board's Code of Ethics and Standards of Conduct

Every CFP exam tests your understanding of ethics heavily—expect multiple questions on the Code of Ethics and Standards of Conduct. The CFP Board revised its standards effective October 1, 2019, consolidating previous rules into a streamlined framework that emphasizes the fiduciary duty as the cornerstone of professional conduct.

The Structure of Professional Standards

CFP Board's professional standards are organized into three distinct areas:

  • Component Purpose Key Focus
  • Code of Ethics Aspirational principles Six ethical principles guiding conduct
  • Standards of Conduct Enforceable duties Specific obligations to clients, firms, and CFP Board
  • Fitness Standards Character requirements Eligibility criteria for certification

The Code of Ethics establishes the ethical foundation for CFP certification. These six principles are aspirational—they describe the ideals CFP professionals strive to uphold in all professional activities. The Standards of Conduct, by contrast, contain enforceable duties with specific requirements that CFP Board can investigate and sanction.

The Six Ethical Principles

The Code of Ethics requires CFP professionals 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

Exam Tip : CFP professionals must follow both the letter and spirit of the Code. The exam tests not just whether you know the rules, but whether you understand their underlying intent.

Standards of Conduct: The Six Duty Categories

The Standards of Conduct expand on the ethical principles by establishing specific duties organized into six categories:

  • Section Duties Coverage
  • A. Duties Owed to Clients A.1-A.15 Fiduciary duty, disclosure, competence, confidentiality
  • B. Financial Planning Definition B.1-B.6 When financial planning applies
  • C. Practice Standards C.1-C.7 The seven-step financial planning process
  • D. Duties Owed to Firms and Subordinates D.1-D.3 Supervision and lawful objectives
  • E. Duties Owed to CFP Board E.1-E.6 Reporting, cooperation, compliance
  • F. Prohibition on Circumvention F.1 Cannot do indirectly what is prohibited directly
  • The Fiduciary Duty: Cornerstone of the Standards

A.1 Fiduciary Duty represents the most significant aspect of the CFP Standards. When providing Financial Advice to a client, a CFP professional must act as a fiduciary, which means:

  • Duty of Loyalty : Place the client's interests above your own
  • Duty of Care : Act with the care, skill, prudence, and diligence that a prudent professional would exercise
  • Duty to Follow Client Instructions : Follow reasonable and lawful instructions from the client

The fiduciary duty applies whenever a CFP professional provides Financial Advice, regardless of whether a formal financial planning engagement exists.

When Does Fiduciary Duty Apply?

Understanding when fiduciary duty applies is critical for the exam:

Activity Fiduciary Duty Applies?

  • Providing Financial Advice to a client Yes
  • Providing Financial Planning services Yes
  • Giving a seminar on general investing topics No (no specific client)
  • Filling out paperwork for a new account No (administrative task)
  • Marketing materials and advertisements No (not Financial Advice)

Financial Advice is defined as a communication that, based on its content, context, and presentation, would reasonably be viewed as a recommendation that the client take or refrain from taking a particular course of action with respect to financial matters.

Material Conflicts of Interest

A CFP professional must disclose material conflicts of interest and obtain the client's informed consent before proceeding. A conflict of interest is "material" if a reasonable client would consider it important when making a decision.

Common Material Conflicts Include:

  • Compensation arrangements (commissions, fees, revenue sharing)
  • Limited product offerings (proprietary products, limited fund families)
  • Referral arrangements (payments for client referrals)
  • Personal financial interests (owning securities you recommend)

The CFP professional must either avoid the conflict or disclose and manage it appropriately. Disclosure alone is insufficient—the conflict must also be managed to ensure recommendations remain in the client's best interest.

Professional Conduct Requirements

The Standards require CFP professionals to maintain professional conduct at all times:

Use of CFP Marks:

  • Use marks appropriately: "Your Name, CFP®" or "CERTIFIED FINANCIAL PLANNER™ professional"
  • CERTIFIED FINANCIAL PLANNER must be in ALL CAPS
  • Follow with one of six approved nouns: professional, certificant, practitioner, certification, mark, or exam
  • Do NOT use marks as part of email addresses or website URLs

Professionalism in Practice:

  • Behave with dignity and courtesy to clients, fellow professionals, and others
  • Maintain objectivity and intellectual honesty
  • Subordinate personal prejudices and feelings when serving clients
  • Key Terminology

Client : A person to whom the CFP professional provides or agrees to provide Professional Services (Financial Advice or Financial Planning).

Financial Planning : A collaborative process that helps maximize a Client's potential for meeting life goals through Financial Advice that integrates relevant elements of the Client's personal and financial circumstances.

Professional Services : Financial Advice or Financial Planning provided by a CFP professional.

Exam Tip : A client is "engaged" when they first rely on the CFP professional's advice—not when a contract is signed or payment is made. This is a frequently tested concept.

Continuing Education: Maintaining Competence

The Code requires CFP professionals to maintain competence through continuing education:

  • 30 hours of CE every two years
  • 2 hours must be CFP Board-approved Ethics CE
  • Practice what you know; refer what you don't know
  • Recognize the limitations of your knowledge
  • The Prohibition on Circumvention

Section F contains a critical rule: A CFP professional may not do indirectly , or through another person or entity, any act that the Code and Standards prohibit doing directly . This prevents CFP professionals from using employees, firms, or third parties to accomplish what they cannot do themselves.