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Hong KongThe Code of Ethics: six commitments, and what each rules out
Six commitments: act with honesty, integrity, competence and diligence; act in the client's best interests; exercise due care; avoid or disclose and manage conflicts; maintain confidentiality and protect privacy; and act in a manner that reflects positively on the profession.
The Code is short. Six commitments, each a sentence, sitting above the detailed Standards of Conduct that follow.
Learn them, because questions quote them, and because they tell you which way the Standards lean when a scenario is ambiguous.
The six
- 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.
What each is actually preventing
| Commitment | The conduct it rules out |
|---|---|
| Honesty, integrity, competence, diligence | Advising outside your competence; letting work drift |
| Client's best interests | Recommending the product that pays you more |
| Due care | Applying a template without regard to circumstances |
| Conflicts | Quiet arrangements the client never learns about |
| Confidentiality and privacy | Discussing clients loosely; poor data handling |
| Reflects positively | Conduct outside the client relationship that damages the profession |
That last row is the one people underestimate. Conduct with no client involved at all - a criminal conviction, a bankruptcy, a public dispute - can breach the sixth commitment.
The fourth commitment offers two routes and they are not equal. Some conflicts must be avoided. Others may be disclosed and managed, with informed consent. A question asking which applies is testing whether you read the conflict as manageable or not.
Competence has a specific meaning
Not "trying hard". It means having the relevant knowledge and skill, and where you do not, either gaining it, obtaining assistance, or limiting or terminating the engagement.
A planner who is asked about a complex estate matter and answers anyway has breached this, even if the answer happens to be right.
How the Code relates to the Standards
The Code states the commitments; the Standards say what they require in specific situations. A question describing conduct is usually testing a Standard, and the Code is what tells you the direction.
Where a scenario has no obvious rule, ask which commitment is under strain. That reliably narrows four options to two.
CFP® is a registered mark of Certified Financial Planner Board of Standards, Inc. We are not affiliated with, or endorsed by, CFP Board. Confirm any provision against the current Code and Standards at cfp.net before relying on it.
Common questions
What are the six CFP Code of Ethics commitments?
Act with honesty, integrity, competence and diligence; act in the client's best interests; exercise due care; avoid or disclose and manage conflicts; maintain confidentiality and protect privacy; and act in a manner that reflects positively on the profession.
What does competence mean in the Code?
Having the relevant knowledge and skill - and where you do not, gaining it, obtaining assistance, or limiting or terminating the engagement. Answering anyway breaches it even if the answer is correct.
Can conduct outside client work breach the Code?
Yes. The sixth commitment covers acting in a manner that reflects positively on the profession, which reaches conduct with no client involved at all.
Must all conflicts be avoided?
No. Some must be avoided; others may be disclosed and managed with the client's informed consent. Deciding which applies is what conflict questions usually test.
How does the Code differ from the Standards?
The Code states six commitments; the Standards of Conduct set out what they require in specific situations. Questions usually test a Standard, and the Code indicates the direction.