The requirement of the public and the business community for sound financial 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 for Members of the Institute of Advanced Financial Planners™.
Members shall act in the best interests of their clients and shall place the interests of their clients above their own.
The professional relationship between a Member and a client may be a trust relationship in nature. Whether strictly a trust relationship or not, the Member owes the client a duty of fidelity, honesty and complete disclosure in the spirit of empowering the client to make truly informed decisions.
A Member should be aware that under common law they may stand in a fiduciary relationship to their client. In such circumstances, they must act with a duty of care required of a fiduciary. Such circumstances may arise from interrelated factors that include, but are not limited to:
– The vulnerability of the client
– The degree of trust between the client and the Member
– The extent to which the client relies on the Member
– The extent to which the Member has power or discretion over the client’s account
– The duties of the Member and the standards to which they are held
A Member has an obligation to disclose, to a client or a prospective client, any actual or potential conflict of interest that is or should be known to the Member. This disclosure shall be in writing and acknowledged by the client.
When recommending products, a Member’s sole concern should be the client’s best interests. Considerations of self-interest, such as the amount of commission to be obtained from products, should have absolutely no bearing upon the Member’s advice to the client or prospective client.
A Member shall inform the client at the earliest possible occasion of changes in circumstances and material information that arise during or subsequent to the original engagement that may have an impact on the professional relationship or services to be rendered. If necessary, an authorized representative could communicate these changes. Such changes include, but are not limited to:
a) conflicts of interest;
b) the Member’s business affiliation;
c) compensation structure affecting the financial planning services to be rendered;
d) new or changed agency relationships;
e) change of location by the client to a jurisdiction where the Member is not licensed and in the opinion of the Member he or she will be unable to discharge his or her obligations to the client;
f) inaction by the client to provide requested information necessary for the continuance of a financial planning engagement;
g) the Member moves to a different location and is no longer licensed in the jurisdiction of the client thereby preventing the Member in his or her opinion from discharging his or her obligations to the client.
Members shall hold in strict confidence all confidential information acquired in the course of the professional relationship with their clients.
A Member will necessarily obtain extensive information concerning the financial affairs of clients and prospective clients. A legal obligation and a duty to maintain such information in confidence is imposed on the Member by the operation of an express or implied contract between the Member and the client. In any case, receiving such information places the Member in a position of trust and responsibility and it is unethical to betray this trust in any respect.
Unlike the privilege in respect of solicitor client communications, a financial planner enjoys no legal privilege in respect of communications with clients and prospective clients. As a result, while a Member should take all appropriate steps to protect the confidential communications of clients, it is recognized that the Member may be compelled to give evidence of those communications in a court of law or in other situations.
If the Member believes it would be in the best interests of the client or prospective client to disclose the client’s affairs with another person, the Member should first get the client’s or prospective client’s permission to do so in writing.
Documents received from a client are at all times the property of the client and must be returned to the client promptly upon the client’s request.
The use of client information for the personal benefit of the Member is prohibited, whether or not it actually causes harm to the client. Client information must not be sold to a third party. A client’s name shall not be disclosed to another party unless specific written consent has been granted.
Members must protect all client information and communications from third parties by using secure systems for the storage of physical and electronic data and records.
Members shall provide to clients clear, written disclosure describing all types and sources of direct and indirect compensation relating to that client relative to recommendations made and services performed.
When recommending products or services provided by the Member or referring the client to receive products or services from a third party, whether inside or outside the Member’s organization, a Member’s sole concern should be the client’s best interests. Considerations of self-interest, such as the amount of commission or any other benefit to be obtained from products, services, or referrals should have absolutely no bearing upon the Member’s advice to the client or prospective client.
Members shall provide advice to clients only on matters within their competence, and do so in a conscientious, timely, and trustworthy manner.
The financial affairs of a client or prospective client may have legal, accounting, investment or taxation ramifications. A Member can and should discuss matters having such ramifications, but must never misrepresent the Member’s qualifications or abilities. In particular, a Member should neither represent that the Member is a lawyer, accountant or investment counsellor, nor leave uncorrected a misapprehension that they are in fact so qualified.
In rendering or proposing to render a professional service for a client, a Member shall not misrepresent their competency or ability to provide that service in a manner that will adequately meet the anticipated financial planning needs of the client.
In recommending a product to a client, a Member shall not misrepresent or conceal any material limitations, which are known or ought to be known to the Member, on the product’s ability to meet the anticipated financial planning needs of the client in question.
Members shall recognize and communicate honestly about their limitations and the limitations of the organizations they represent and seek relevant support from third parties as appropriate.
Members shall maintain the abilities, skills and resources to provide the products and services sufficient to fulfill their commitment to their clients
Members shall make every effort to provide objective and impartial information to clients regarding their financial needs, and advise clients of their various options, describing the negative as well as the positive aspects of any recommendations.
A Member shall identify and explain to the client all negative aspects, including the potential risks, of the Member’s recommendations.
A Member has an obligation to provide complete and accurate information, with intellectual honesty and in the spirit of empowering a client to make truly informed decisions. A Member must not omit to provide information or fail to correct a mistaken impression which the Member knows, or ought to know, exists.
Members shall exercise due diligence in the performance of their duties.
In providing professional services to clients, a Member has a legal duty to meet the standard of care exercised by a competent financial planner.
In making recommendations to a client, a Member shall:
a) distinguish clearly between fact and opinion,
b) base the recommendations on sound professional evaluations of the client’s present and future needs,
c) support the recommendations with appropriate research, facts and assumptions that are reasonable and defendable,
d) explain fully the nature and possible consequences of any recommendations and avoid any statements which may mislead the client regarding the projected future results of any recommendations.
Members shall ensure that those under their supervision perform their duties diligently and in a manner that does not compromise the Professional Practice Standards set by the Institute.
Members shall take reasonable steps to ensure the trustworthiness of third-party professionals and other service providers to whom the Member refers the client.
Members shall at all times comply with the By-Laws, Rules, Regulations and Professional Standards of the Institute of Advanced Financial Planners™.
Through their conduct, a Member shall strive to inspire confidence and respect in themselves, the Institute, and fellow Members among their clients and the community at large.
Members shall treat other Members of the Institute and members of the financial planning community with respect and courtesy.
A Member has the duty to be aware of, to understand, and abide by the Canons and Tenets of the Code of Professional Ethics, Rules, Regulations, Planning Standards, and Practice Standards, as adopted from time to time, by the Institute of Advanced Financial Planners™.
A Member shall not misrepresent their own credentials and qualifications, or the criteria for membership in the Institute.
Members shall comply with all relevant laws, regulations and standards of any governmental or other professional bodies with jurisdiction, and advise the Institute of any transgressions.
A Member shall report to the institute in a timely manner if that Member is subject to any disciplinary action for the violation of any law or regulation.
In the conduct of business and professional activities, a Member shall not engage in any act or omission of a dishonest, deceitful, or fraudulent nature.
A Member has a duty to know, and to act strictly within, the legal limitations imposed upon the scope of the Member’s professional activities.
A Member who possesses information concerning an alleged violation of the Code of Professional Ethics, or any relevant law, should report the alleged violation to an appropriate authority.
Members shall continually seek to maintain and improve their knowledge, skills and competence in financial planning.
A Member shall keep informed of all matters that are essential to the maintenance of the Member’s professional competence in the Member’s area of specialization or in which the Member claims expertise. In addition, a Member shall make reasonable efforts to improve the Member’s professional competence in such areas.
Members shall endeavour to place the public interest above their own and shall not do anything that would tend to bring the profession of financial planning and/or the Institute of Advanced Financial Planners™ into disrepute.
A Member shall support efforts to provide the public with objective and accurate information concerning their financial planning needs and the resources that are available to meet those needs.
A Member shall not misrepresent or denigrate another Member or their financial planning firm, or the benefits, costs or limitations of any financial planning service or product. However, this Tenet is in no way intended to restrict a Member from making a positive statement about himself, his financial planning firm, or the benefits, costs, or virtues of any financial planning service or product offered by him or his firm. This Tenet is not intended to limit the Member’s ability to express his honest assessment in the process of advising or counselling his client.
A Member shall not misstate or allow a misapprehension to exist as to the Member’s authority to represent the Institute of Advanced Financial Planners™. A Member shall not write, speak, or act in a manner that may lead another to believe that the Member is officially representing the Institute, unless the Member has been duly authorized to do so by the Regents, Officers or By-Laws of the Institute of Advanced Financial Planners™.
A Member shall not use the fact of membership in the Institute of Advanced Financial Planners™ in any manner other than those authorized in Regulation 02, “The Advertising Guidelines.”
A Member shall not sponsor as a candidate for membership in the Institute of Advanced Financial Planners™ any person whom the Member knows, or on reasonable grounds believes, to be engaged in business or professional practices which would violate the Tenets or the Canons of the Code of Professional Ethics if engaged in by a Member of the Institute.
Members shall encourage other Members to pursue and maintain professionalism, and adhere to this Code of Professional Ethics and other standards set by the Institute.
As used throughout these Tenets, the term “client” refers broadly to any individual, business, firm, association, society, governmental body, educational institution or any other entity or person that retains the professional advice or services of a Member as an independent professional. It does not include an entity entering into an employer employee relationship with a Member.
Enforcement and interpretation of the Canons shall be governed by the Rules and Regulations of the Institute of Advanced Financial Planners™. A Member, current or former, who violates the Canons and Tenets of the Code of Professional Ethics may be subject to one or more of the following:
a) Permanent expulsion from the Institute of Advanced Financial Planners™,
b) Permanent loss of the right to use the R.F.P.® designation,
c) Temporary expulsion from the Institute of Advanced Financial Planners™, with reapplication and re-qualification being required,
d) Temporary loss of the right to use the R.F.P.® designation,
e) A written reprimand from the President,
f) Publication of such violation,
g) Entering such violation on the Member’s personal records,
h) Such other measures as are deemed appropriate, from time to time, by the Standing Committee on Ethics.