of Ethics Online Collection: September 1982
THE OBJECTIVE OF THE CODE
The objective of the Code of Professional Ethics is to specify and set forth the means to enforce the minimum ethical conduct expected of all members as professionals, and to facilitate voluntary compliance with standards considerably higher than the required minimums. Accordingly, the Code prescribes three kinds of standards: Canons, Rules of Professional Conduct, and Guidelines for Professional Conduct.
The Canons serve as model standards of exemplary professional conduct. They express the general concepts and principles from which the more specific Rules are derived.
The Rules are specific standards of a mandatory and enforceable nature. They prescribe the absolute minimum level of conduct required of every member.
The Guidelines are explanatory statements designed to assist members in interpreting the Canons and Rules, understanding their rationale, and applying them to frequently encountered situations. A copy of the Guidelines is available on request from the Association.
Although the official Code of Professional Ethics consists of all Canons, Rules, and Guidelines, only a violation of the Rules will constitute sufficient grounds for disciplinary action. The Canons and Guidelines are used by the Ethics Committee to apply and interpret the Rules uniformly, with reference to the general principles and concepts they embody. The Ethics Committee may also refer to applicable rulings in previous cases brought before the Committee, as well as relevant published opinions of the Ethics Committee.
The Code of Professional Ethics
The reliance of the public and the business community on sound financial planning and advice imposes on financial planning professionals an obligation to maintain high standards of technical competence, morality, and integrity. To this end, the following Code of Professional Ethics serves as the guiding document.
CANON I
Members should endeavor as professionals to place the public interest above their own.
Rules of Professional Conduct:
R1.1 A member has a duty to understand and abide by all Rules of Professional Conduct which are prescribed in the Code of Professional Ethics of the Association.
R1.2 A member shall not directly or indirectly condone any act which the member is prohibited from performing by the Rules of this Code.
CANON 2
Members should seek continually to maintain and improve their professional knowledge, skills, and competence.
Rules of Professional Conduct:
R2.1 A member shall keep informed on all matters that are essential to the maintenance of the member's professional competence in the area in which he/ she specializes and/or claims expertise.
CANON 3
Members should obey all laws and regulations and avoid any conduct or activity which could cause unjust harm to those who rely upon the professional judgment and skill of the members.
Rules of Professional Conduct:
R3.1 A member shall be subject to disciplinary action for professional misconduct and has the duty to know and abide by the laws and regulations and all legal limitations pertaining to the member's professional activities.
R3.2 A member shall place the needs and best interest of the client above the needs and interests of the member, the member's employees or business associates in all cases; and shall not allow the pursuit of financial gain or other personal benefit to interfere with the exercise of sound professional judgment and skills.
R3.3 In the conduct of business or professional activities, a member shall not engage in any act or omission of a dishonest, deceitful or fraudulent nature.
R3.4 A member shall not knowingly misrepresent or conceal any material limitation on the member's ability to provide the quantity or quality of service that will adequately meet the financial planning needs of the client.
R3.5 In marketing a product, a member shall not knowingly misrepresent or conceal any material limitations on the product's ability to meet the financial needs of the client, and shall scrupulously avoid any statements which are likely to mislead the client regarding the future results of any recommendation.
R3.6 A member has the duty to disclose fully and accurately the material facts representing the true costs, benefits, and limitations of any service or product recommended; and disclose any actual or potential conflict of interest that could impair objectivity.
R3.7 A member shall not disclose to another person any confidential information entrusted to or obtained by the member in the course of the member's business or professional activities, unless a disclosure of such information is required by law or is made to a person who necessarily must have the information in order to discharge legitimate occupational or professional duties.
R3.8 In the rendering of a professional service to a client, a member has the duty to maintain the type and degree of professional independence that (a) is required of practitioners in the member's occupation, or (b) is otherwise in the public interest, given the specific nature of the service being rendered.
CANON 4
Members should be diligent in the performance of their occupational duties.
Rules of Professional Conduct:
R4.1 A member shall competently an& consistently discharge the member's occupational duties to every employer, client, purchaser, or user of the member's services, so long as those duties are consistent with what is in the client's best interests.
R4.2 In the making of oral or written recommendations to clients, a member shall (a) distinguish clearly between fact and opinion, (b) base the recommendations on sound professional evaluation of the client's needs, and (c) support the recommendations with appropriate research and adequate documentation of facts.
CANON 5
Members should assist in improving the public understanding of financial planning.
Rules of Professional Conduct:
R5.1 A member shall support efforts to provide laypersons with objective information concerning their financial planning needs, as well as the resources which Are available to meet their needs.
R5.2 A member shall not misrepresent the benefits, costs, or limitations of any financial planning service or product, whether the product or service is offered by the member or by another individual or firm.
CANON 6
Members should use the fact of membership in a manner consistent with the Association's Rules of Professional Conduct.
Rules of Professional Conduct: R6.1 A member shall not misrepresent the criteria for admission to Association membership, which criteria are (1) active participation in the financial services industry; and (2) a written commitment to abide by the Bylaws and the Code of Professional Ethics of the Association.
R6.2 A member shall not misstate his/her authority to represent the Association. Specifically, a member shall not write, speak, or act in such a way# as to lead another to believe that the member is officially representing the Association, unless the member has been duly authorized to do so by the officers, directors, or Bylaws of the national Association.
R6.3 A member shall not use fact of general membership in the Association for commercial purposes. A member may use fact of general membership for the flowing non-commercial purposes: in resumes, prospectus, and in introductions if the speaker clearly states that, the opinions and ideas presented are his/her own and not necessarily those of the Association Fact of Division membership may be used by an individual in the Practitioner Division,' or by a company in the Corporate or Broker-Dealer Divisions?
1 Individual members in the Practitioner Division (those who have met the necessary requirements of the Division and have signed the Practitioner Division Certificate) may use fact of membership in the following manner: Member, Practitioner Division International Association for Financial Planning Members of the Practitioner Division should contact the compliance department of their broker-dealer to make sure any state or NASD regulatory concerns are addressed before using fact of membership for commercial purposes.
2 Companies in the Corporate and Broker-Dealer Divisions may use fact of membership as follows: Member, Corporate Division International Association for Financial Planning; Member, Broker-Dealer Division International Association for Financial Planning
R6.4 A member or prospective member applying for Association membership shall not misrepresent any credentials or affiliations with other organizations.
CANON 7
Members should assist in maintaining the integrity of the Code of Professional Ethics of the Association.
Rules of Professional Conduct:
R7.1 A member shall not sponsor as a candidate for Association membership any person who is known by the member to engage in business or professional practices which violate the Rules of this Code.
R7.2 A member possessing unprivileged information concerning an alleged violation of this Code shall, upon request, reveal such information to the body or other authority empowered by the Association to investigate or act upon the alleged violation.
Complaint Procedures for Allegations of Ethics Violations
1 . Ethics allegations may be initiated by (1) Chapter ethics officers, (2) Association members, (3) the public or allied organizations, or (4) the Ethics Committee. The Ethics Committee can only act upon complaints against current members of the Association.
2. All complaints must be in writing, and be accompanied by a detailed account of the situation with relevant documents attached. Official complaint forms are available from the National Office or from chapter ethics officers. All complaints, regardless of the source, should be forwarded to the National Office for investigation.
3. A member 'who has allegedly committed a violation will be notified by certified letter; a copy of the letter is sent to the individual initiating the complaint. The named member must respond to the complaint letter within thirty days; failure to respond may result in automatic termination of membership.
4. A report on the complaint is prepared by the Association staff and submitted to the Ethics Committee for review at its next meeting. The report is based on details from the initial allegation documents, information from the named member's response, and any additional facts that have been obtained.
5. The Ethics Committee can take one of the following actions on reviewed complaints:
• Dismiss the case with no action.
• Delay the case until further information is received.
• Reprimand the member.
• Remove the member from membership in the Association or The Registry. If this course of action is taken, the member has the right to appeal the decision. Appeals must be made in writing, and will be reviewed by the Disciplinary Appeals Board of the Association, or The Registry Appeals Board.
• If the member is a Registry financial planner, suspend, the member from The Registry for a period of time determined by the Committee.
International
Association for
Financial Planning
