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Practice and exam technique

Practice questions: professional conduct and regulation

Compiled by the Sitonce editorial team from CFP Board sources listed belowUpdated 4 min readFacts verified 1 September 2026
The short answer

Professional conduct is 8 per cent of the exam and the source material is one readable document. These five cover the fiduciary duty, conflict management, when the Practice Standards apply, and reporting obligations.

The highest-return practice set on the site, because the answers are stated in a document rather than requiring judgment between defensible alternatives.

Question 1

A CFP professional recommends one of two suitable mutual funds. The recommended fund pays her a higher commission. She discloses the difference in writing and the client signs. Which is correct?

  1. Compliant - the conflict was disclosed and consented to
  2. Compliant, provided the fund is suitable
  3. Not compliant - the duty of loyalty requires acting without regard to her own financial interest
  4. Not compliant - commission-based compensation is prohibited
Answer: C. Disclosure and informed consent are available for conflicts that can be managed. They do not convert a recommendation made because it pays more into a compliant one. The duty of loyalty requires acting without regard to the CFP professional's own financial interest, which is the whole point of the question.
Question 2

A CFP professional meets a prospective client, hears one concern about retirement income, and recommends an annuity in that first meeting. What is the primary failure?

  1. The annuity was unsuitable
  2. Steps one to three of the Practice Standards were skipped
  3. A conflict was not disclosed
  4. The engagement was not documented
Answer: B. Understanding the client's circumstances, identifying and selecting goals, and analyzing the current and alternative courses of action all precede developing a recommendation. The annuity may even be sensible, which is what makes the question work - the failure is the sequence.
Question 3

A CFP professional is charged with a felony. The matter has not yet been decided. What must he do?

  1. Nothing, until there is a conviction
  2. Report the charge to CFP Board within the required period
  3. Report it only if it relates to financial services
  4. Notify his firm but not CFP Board
Answer: B. Charges, not only convictions, are reportable to CFP Board within the required period - thirty calendar days under the current Standards. Waiting for an outcome is a separate violation on top of whatever the original matter turns out to be.
Question 4

A CFP professional supervises a junior adviser who makes an unsuitable recommendation. The CFP professional was unaware and had no process for reviewing recommendations. Which applies?

  1. No violation, since he was unaware
  2. A violation of the duty to use reasonable care in supervising
  3. A violation only if the client suffered a loss
  4. A violation of the duty of loyalty
Answer: B. Part D requires reasonable care when supervising. The duty attaches to the role rather than to the conduct, so being unaware is what the provision addresses rather than a defense to it. Client loss is not the test.
Question 5

A client asks a CFP professional to place all assets in a single stock, against advice. What is the appropriate response?

  1. Follow the instruction, since the duty is to follow client instructions
  2. Refuse and terminate the engagement immediately
  3. Document the advice given and the client's decision, and consider whether the engagement can continue consistently with the duty of care
  4. Follow the instruction after obtaining a written waiver of the fiduciary duty
Answer: C. The duty to follow client instructions covers reasonable and lawful directions. Where an instruction cannot be reconciled with the duty of care, documenting the advice and considering whether to continue is the correct route. Option D fails because a client cannot waive the fiduciary duty.

What these five have in common

Each describes conduct that is legal, common in the industry, and still a Standards violation.

That is the domain in one sentence. "Would a regulator prosecute this?" and "does this comply with the Standards?" are different questions, and the exam asks the second.

On the trademark

CFP® is a registered mark of Certified Financial Planner Board of Standards, Inc. We are not affiliated with, or endorsed by, CFP Board.

Common questions

Does disclosing a conflict make a recommendation compliant?

No. Disclosure with informed consent is available for conflicts that can be managed, but it does not convert a recommendation made in your own financial interest into a compliant one.

What is wrong with recommending in the first meeting?

Steps one to three of the Practice Standards - understanding circumstances, identifying goals, and analyzing current and alternative courses - all precede developing a recommendation.

Do you report criminal charges or only convictions?

Charges as well, within the required period. Waiting for an outcome is a separate violation on top of the original matter.

Can you be disciplined for a subordinate's conduct?

Yes. Part D requires reasonable care when supervising, and the duty attaches to the role - being unaware is what the provision addresses rather than a defense to it.

Must you follow every client instruction?

Only reasonable and lawful ones. Where an instruction cannot be reconciled with the duty of care, document the advice and consider whether the engagement can continue. The duty cannot be waived.

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