Practice Quiz

Financial Planner

Category - Professional Conduct and Regulation

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Which of the following is true regarding establishing a relationship with a client?
  1. The scope of engagement must be in writing and signed by both the Certified Financial Planner and the client
  2. The Certified Financial Planner should identify the scope of engagement alone, after consulting with the client
  3. The Certified Financial Planner should let the client know all compensation arrangements
  4. The scope of engagement cannot change after the initial establishment of the relationship
Explanation
Answer: C - The practitioner (Certified Financial Planner) should disclose any conflicts of interest and all compensation arrangements to the client while establishing the scope of the engagement. The scope should be mutually agreed by both the practitioner and the client, and the relationship can be altered if both agree later in the relationship. While the scope of engagement does not have to be in writing, there are certain aspects that may need to be written.
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