Become a financial planner

221Financial Planning HandbookPDP
Chapter 34

222 Financial Planning Handbook PDP
Becoming a Financial Planner
Certified Financial PlannerCM and CFPCM
are registered service marks of the Certified Financial
Planner Board of Standards and are held under license by the Financial Planning Standards Board,
India (FPSB). FPSB India is an affiliate of FPSB USA. It has been promoted by prominent financial
companies in India.
FPSB India is a professional membership and certification organization. It governs and awards the
CFPCM
certification in India. Candidates wanting to practice financial planning by using the CFPCM
mark
need to fulfill certain requirements regarding registration and licensing. These requirements are aimed at
providing better service experience to the clients. FPSB India has prescribed these requirements to
maintain and enhance the reputation and respectability of the CFPCM
profession.
Registration and Licensing
There are four initial certification requirements to become a CFPCM.
1. Education: A candidate for the CFPCM
certification must complete academic coverage of the financial
planning curriculum. This demonstrates to the public that the candidate has acquired the necessary
knowledge to become a financial planner. The CFPCM
certificant has to complete the education
programme in a maximum of seven years.
2. Examination: The candidate needs to clear the CFPCM examinations before he/she can claim to be
a Certified Financial PlannerCM
. The CFPCM
examinations are designed to judge the candidate’s
knowledge and ability to apply it to real-life situations. The examination tests candidates on various
areas including insurance and risk management, retirement and employment benefits, investment
planning, estate and tax planning, and financial planning. By clearing the CFPCM
examinations, the
candidate demonstrates to the public that he/she is competent and capable of practicing financial
planning.
3. Experience: The candidate should be a graduate and should have a minimum experience of three
years, acquired before, during or after the successful completion of the certification examination.
Work experience is not mandatory for the candidates vying for the junior designation – Associate
Financial Planner (AFP).
4. Ethics: All candidates need to follow the professional code of ethics prescribed by FPSB, India. We
will discuss the code of ethics in greater detail in the following part of this chapter.

Code of Ethics
The nature of the financial planning profession is such that it requires a high level of trust between the
financial planner and his client. It also requires the financial planner to maintain the highest level of
confidentiality and to perform his job with utmost diligence and competence. Without these essential
ingredients, any financial planning is unlikely to succeed. The financial planner should:
Provide advise to the client with utmost
Integrity;
Objectivity;
Competence;
Fairness;
Confidentiality;
Professionalism; and
Diligence
Not solicit clients through false or misleading communications;
Not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation;
Show the care required of a fiduciary;
Exercise reasonable and prudent professional judgment;
Always act in the interest of the client; and
Offer advice only in those areas in which he has competence. In areas where the planner is not
professionally competent, he should seek the counsel of qualified individuals with prior information
to and assent of the client.
For financial planning to become a trusted and respected profession, it is necessary that its practitioners
do not slip up on their service quality. To ensure this, FPSB India has prescribed a ‘Code of Ethics.’ All
members of the CFPCM community have to adhere to this code.
Definition:
Ethics refer to our moral principles and guidelines that influence our choices in advising clients.
The Code of Ethics describes the core values expected to be applied by CFPCM
members in their dealings
with their clients, colleagues, employers, and the community. The code of ethics has been created for
ensuring that the CFPCM
members maintain high standards of technical competence, morality and integrity.
Every member is required to abide by these codes in their professional activities and conduct.
The values articulated in the Code of Ethics are broadly concerned with:
how the client-planner relationship must be conducted
how financial planning decisions should be taken

For the complete text of the Code of Ethics, please refer to Annexure 1 at the end of this chapter.
Rules that pertain to the code of ethics of integrity
A member should not solicit the client through:
Misleading advertising which involves false communication about the size, scope, or areas of
competence of the member’s practice.
Misleading promotional activities which include false promotion through speeches, interviews, books,
seminars and so on.
False representation of authority which involves posing as one of the members of the FPSB group
unless authorized to do so.
Dishonesty, fraud, deceit or misinterpretation.
A member should follow certain responsibilities regarding funds and/or other property of clients. These are:
To maintain and keep complete records of all funds or property.
To deliver any funds or property which the client is entitled to receive.
To keep separate the client’s funds from a member’s personal funds/property.
Rules that pertain to the code of ethics of objectivity
A member is required to:
Exercise reasonable professional judgment in providing services.

Act in the interest of the client.
Disclose in writing to the client any limitations in providing services.
Rules that pertain to the code of ethics of objectivity competence
A member should:
Keep the client informed of the developments in the field of financial planning.
Offer advice only in those areas in which the member has competence.
Appoint representatives on the basis of appropriate standards.
Rules that pertain to the code of ethics of fairness
In providing professional services, a member should ensure that:
Clients are informed in writing about the nature of the services provided, material relevant to the
professional relationship, access to internal and external complaint handling mechanisms and so on.
There is fairness in compensation.
Rules that pertain to the code of ethics of confidentiality
A member should:
Not reveal any personal identification about the client without the client’s consent.
Keep confidential any information concerning the FPSB.
Provide the client with any original document related to the financial planning upon request by the
client.
Rules that pertain to the code of ethics of professionalism
A member should:
Show respect for other financial planning professionals.
Effect and maintain personal insurance.
A member should not:
Engage in any conduct that reflects adversely on his or her integrity.
Practice any other profession unless certified by the law.
Misinterpret the status of his membership.
Misstate his authority to represent the FPSB.
Rules that pertain to the code of ethics of diligence
In preparing oral and written recommendations to clients, a member should:
Collect sufficient information to ensure that proper advice can be given.
Develop a suitable financial strategy.
Also, a member should:
Make all recommendations in writing.
Confirm in writing any change in the financial strategy.
Rules that pertain to the code of ethics of compliance
A member should:
Perform service in accordance with rules and regulations of government agencies.

Use the marks in compliance with the rules of the FPSB.
Co-operate with the FPSB for any investigation.
Comply with all applicable post-certification requirements established by the FPSB.
Gathering client data
The financial Planner has to explore the client’s current financial resources and keep in mind his obligations.
He will consider the expectations and time horizon for fulfillment before recommendations
Analyzing and evaluating the client’s financial status
A practitioner must consider both personal and economic assumptions of the client in order to determine
the financial status. These assumptions might include:
Personal assumptions, such as: retirement age, life expectancy, income needs, risk factors, time
horizon, and special needs; and
Economic assumptions, such as inflation rates, tax rates, and investment returns.
Developing and presenting the financial planning recommendations
This guideline is divided into three stages:
1. Identifying and evaluating – A practitioner should consider all relevant alternatives to achieve the
client’s goals, needs, and priorities. This evaluation might involve:
a. Considering multiple assumptions
b. Conducting research
c. Consulting with other professionals
2. Recommendation – A practitioner should develop the recommendation based on selected alternatives
and the current course of action. The recommendations are directly affected by:
a. Personal and economic assumptions
b. Alternatives selected by the practitioner
c. Quantitative data provided by the client
3. Presentation – A practitioner should communicate the recommendation in a manner necessary to
assist the client in making an informed decision. The practitioner should communicate the factors
critical to the client’s understanding of the recommendations which might include:
a. Personal and economic assumptions
b. Advantages and disadvantages
c. Risks
d. Time sensitivity
Implementing the financial planning recommendations
This guideline is divided into two stages:
1. Agreeing on implementing responsibilities – the practitioner and the client should mutually agree on
the implementation of the responsibilities consistent with the scope of the agreement. The practitioner’s
responsibilities might include:
a. Identifying activities necessary for implementation
b. Selecting and securing products

2. Selecting products and services for implementation – a practitioner should select the products and
services based on professional judgment that includes both qualitative and quantitative information.
Monitoring the financial planning recommendation
This guideline is used to clarify the role of the planner, if any. The planner should define and communicate
to the client the services which they intend to provide.
Chapter Review

Code Of Ethics
ANNEXURE 1
Introduction
The Code of Ethics is a set of general standards that shall apply to all classifications of membership,
unless otherwise stated. Every member shall conform to the general standards set out in this Article
in their professional activities and conduct.
Code of Ethics 1 - Integrity
Members shall observe high standards of honesty in conducting their financial planning business and
shall offer and provide financial planning services with integrity.
Code of Ethics 2 - Objectivity
Members shall disclose to the client any limitation on their ability to provide objective financial planning
services.
Code of Ethics 3 - Competence
Members shall provide competent financial planning services and maintain the necessary knowledge
and skill to continue to do so in those areas in which the Member is engaged.
Code of Ethics 4 - Fairness
Members shall provide financial planning services in a manner that is fair and reasonable.
Code of Ethics 5 - Confidentiality
Members shall not disclose any confidential client information without the specific consent of the provider
of that information unless compelled to by law or as required to fulfill their legal obligations.
Code of Ethics 6 - Professionalism
Members shall ensure their conduct does not bring discredit to the financial planning profession.
Code of Ethics 7 - Diligence
Members shall act with due skill, care and diligence in providing financial planning services.
Code of Ethics 8 - Compliance
Members must maintain knowledge of and comply with the Constitution of the FPSB India, the FPSB
India’s Code of Ethics and Rules of Professional Conduct and all applicable laws, rules and regulations
of any government, government agency, regulatory organization, licensing agency or professional
association governing the members’ professional activities.

Rules of Professional Conduct
ANNEXURE 2
Introduction
The Rules of Professional Conduct are specific standards that shall apply to all classifications of
membership, unless otherwise stated. Every member shall adhere to the rules set out in this Article
in their professional activities and conduct, and the FPSB India may enforce the observation of the rules.
INTEGRITY: Rules that Relate to the Ethic of Integrity
Rule 101
A Member shall not solicit clients through false or misleading communications or advertisements:
(a) Misleading Advertising: A Member shall not make a false or misleading communication about the
size, scope or areas of competence of the Member’s practice or of any organization with which the
Member is associated; and
(b) Promotional Activities: In promotional activities, a Member shall not make materially false or misleading
communications to the public or create unjustified expectations regarding matters relating to financial
planning or the professional activities and competence of the Member. The term “promotional activities”
includes, but is not limited to, speeches, interviews, books, printed or electronic publications, seminars,
radio and television shows, and video cassettes; and
(c) Representation of Authority: A Member shall not give the impression that a Member is representing
the views of the FPSB India or any other group unless the Member has been authorized to do so.
Personal opinions shall be clearly identified as such.
Rule 102
In the course of professional and business activities, a Member shall not engage in conduct involving
dishonesty, fraud, deceit or misrepresentation, or knowingly make a false or misleading statement to a
client, employer, employee, professional colleague, governmental or other regulatory body or official, or
any other person or entity.
Rule 103
A Member has the following responsibilities regarding funds and/or other property of clients:
(a) In exercising custody of or discretionary authority over client’s funds or other property, a Member
shall act only in accordance with the authority set forth in the governing legal instrument (e.g.,
special power of attorney, trust, letters testamentary, etc.); and
(b) A Member shall identify and keep complete records of all funds or other property of a client in the
custody of or under the discretionary authority of the Member; and
(c) Upon receiving funds or other property of a client, a Member shall promptly or as otherwise permitted
by law or provided by agreement with the client, deliver to the client or third party any funds or other
property which the client or third party is entitled to receive and, upon request by the client, render a
full accounting regarding such funds or other property; and

(d) A Member shall not commingle client funds or other property with a Member's personal funds and/or
other property or the funds and/or other property of a Member's firm. Commingling one or more client's
funds or other property together is permitted, subject to compliance with applicable legal requirements
and provided accurate records are maintained for each client's funds or other property; and
(e) A Member, who takes custody of all or any part of a client's assets for investment purposes, shall do
so with the care required of a fiduciary.
Rule 104
A Member shall not make any statements, orally or in writing, that misrepresent the services they or their
Company is capable of providing, and the data or facts that are used to support any recommendation.
OBJECTIVITY: Rules that Relate to the Ethic of Objectivity
Rule 201
A Member shall exercise reasonable and prudent professional judgment in providing professional services.
Rule 202
A financial planning practitioner shall act in the interest of the client.
Rule 203
At the earliest point in the relationship, a Member shall disclose in writing to the client if the Member is
only authorized to sell or advise on a restricted range of products, and any other limitation of their
capacity to serve the client.
Rule 204
In the provision of any written recommendation contained in a financial plan, a financial planning practitioner
shall make timely written disclosure of all material information relative to the professional relationship. In
all circumstances, such disclosure shall include conflict(s) of interest(s) and sources of compensation.
Disclosures that include the following information are considered to be in compliance with this Rule:
(a) A statement of compensation, which in reasonable detail discloses the source(s) and any contingencies
or other aspects material to the fee and/or commission arrangement. Any pecuniary or non-pecuniary
benefit whether direct or indirect, received or receivable by the Member, the Member's firm, or an
associate in connection with the financial planning service should be fully disclosed. The statement
should include: any benefit reasonable capable of influencing the making of recommendations; any
benefit that a third party may receive in connection with the recommendation; and any other costs
borne by the client should they accept all or part of the recommendation. The disclosures of the
particulars may be made either in percentage terms or in monetary terms and any estimates made
shall be clearly identified as such and shall be based on reasonable assumptions. Referral fees, if
any, shall be fully disclosed; and
(b) A statement indicating whether the Member's compensation arrangements involve fee-only,
commission-only, or fee and commission. A Member shall not hold out as a fee-only financial planning
practitioner if the Member receives commissions or other forms of economic benefit from related
parties; and
(c) A statement describing the nature and extent of any significant financial relationships or connections
a Member has with product suppliers and the fees or commissions resulting from such relationships;
and
(d) A statement identifying any other conflict(s) of interest(s). Rule 205

Rule 205
If financial planning services are provided orally, a Member must disclose orally to the client the particulars
described in Rule 204.
Rule 206
Should conflict(s) of interest(s) develop after a professional relationship has been commenced a Member
shall promptly disclose in writing the conflict(s) of interest(s) to the client. The Member must be able to
demonstrate that the client was made aware of any actual or potential conflict of interest.
Rule 207
In addition to the disclosure by financial planning practitioners regarding sources of compensation required
under Rule 204, such disclosure shall be made annually thereafter for ongoing clients. The annual disclosure
requirement may be satisfied by offering to provide clients with the disclosure called for by Rule 204.
COMPETENCE: Rules that Relate to the Ethic of Competence
Rule 301
A Member shall keep informed of developments in the field of financial planning and participate in continuing
education throughout the Member's professional career in order to improve professional competence in
all areas in which the Member is engaged. As a distinct part of this requirement, a Member shall satisfy
all continuing professional development requirements established for Members by the FPSB India from
time to time.
Rule 302
A Member shall offer advice only in those areas in which the Member has competence. In areas where
the Member is not professionally competent, the Member shall seek the counsel of qualified individuals
and/or refer clients to such parties.
Rule 303
A Member shall have reasonable and appropriate standards for the appointment of Representatives.
FAIRNESS: Rules that Relate to the Ethic of Fairness
Rule 401
In rendering professional services, a Member shall ensure that prospective clients are clearly informed in
writing about:
(a) The identity of the Company responsible for the advice and, if the advice is provided through a
Representative, the identity of the Representative;
(b) The nature of services offered;
(c) Material information relevant to the professional relationship, including but not limited to changes in
the Member's business affiliation, address, telephone numbers, credentials, qualifications, certificates,
compensation structure, etc.;
(d) The information required by all laws applicable to the relationship in a manner complying with such
laws;
(e) Access to internal and external complaint handling mechanisms.

Rule 402
A Member's compensation shall be fair and reasonable.
Rule 403
Prior to establishing a client relationship, and consistent with the confidentiality requirements of Rule 501, a
Member may provide references which may include recommendations from present and/or former clients.
Rule 404
A Member shall clearly disclose to all prospective clients the capacity in which they are able to provide
financial planning services.
Rule 405
Whether a Member is employed by a financial planning firm, an investment institution, or serves as an
agent for such an organization, or is self-employed, all Members shall adhere to the same standards of
disclosure and service.
Rule 407
A Member shall:
(a) Advise the Member's employer of outside affiliations which reasonably may compromise service to
an employer; and
(b) Provide timely notice to the employer and clients, unless precluded by contractual obligation, in the
event of change of employment or FPSB India licensing status.
Rule 408
A Member doing business as a partner or principal of a financial services firm owes to the Member's
partners or co-owners a responsibility to act in good faith. This includes, but is not limited to, disclosure
of relevant material and financial information while in business together.
Rule 409
A Member shall join a financial planning firm as a partner or principal only on the basis of mutual disclosure
of relevant material and information regarding credentials, competence, experience, licensing and/or
legal status, and financial stability of the parties involved.
Rule 410
A Member who is a partner or co-owner of a financial services firm who elects to withdraw from the firm
shall do so in compliance with any applicable agreement, and shall deal with his or her business interest
in a fair and equitable manner.
Rule 411
A Member shall inform his or her employer, partners or co-owners of compensation or other benefit
arrangements in connection with his or her services to clients, which are in addition to compensation
from the employer, partners or co-owners for such services.
Rule 412
If a Member enters into a business transaction with a client, the transaction shall be on terms that are fair
and reasonable to the client.

CONFIDENTIALTY: Rules that Relate to the Ethic of Confidentiality
Rule 501
A Member shall not reveal - or use for his or her own benefit - without the client's consent, any personally
identifiable information relating to the client relationship or the affairs of the client, except and to the
extent disclosure or use is reasonably necessary:
(a) To establish an advisory or brokerage account, to effect a transaction for the client, or as otherwise
impliedly authorized in order to carry out the client engagement; or
(b) To comply with legal requirements or legal process; or
(c) To defend the Member against charges of wrongdoing; or
(d) In connection with a civil dispute between the Member and the client.
For purposes of this rule, the proscribed use of client information is improper whether or not it actually
causes harm to the client.
Rule 502
A Member shall maintain the same standards of confidentiality to employers as to clients.
Rule 503
A Member doing business as a partner or principal of a financial services firm owes to the Member's
partners or co-owners a responsibility to act in good faith. This includes, but is not limited to, adherence
to reasonable expectations of confidentiality both while in business together and thereafter.
Rule 504
Unless compelled to by law, or as required to fulfill a legal obligation, any Member who by reason of his
membership in the FPSB India is exposed to, learns of or has access to information and knowledge
concerning the FPSB India and/or Members, must keep confidential all such information and knowledge
and is not entitled to communicate or divulge that information or knowledge or any part thereof.
Rule 505
A Member must, when requested to do so by a client, give to the client or another person authorized by
the client, any original document (not photocopies) related to the provision of financial planning advice for
which the client has paid or will pay for. This does not include documents which have been prepared or
received by the Member in undertaking the advisory task, such as internal notes, memoranda, quotes or
other working documents.
PROFESSIONALISM: Rules that Relate to the Ethic of Professionalism
Rule 601
A Member shall show respect for other financial planning professionals, and related occupational groups,
by engaging in fair and honorable competitive practices.
Rule 602
A Member shall not engage in any conduct that reflects adversely on his or her integrity or fitness as a
Member, upon the marks, or upon the profession.

Rule 603
A Member shall not practice any other profession or offer to provide such services unless the Member is
qualified to practice in those fields and is certificated as required by law.
Rule 604
A Member shall effect and maintain professional indemnity insurance in accordance with the requirements
prescribed by the FPSB India from time to time. A Member must notify the FPSB India in writing immediately
of any material change to its professional indemnity insurance.
Rule 605
A Member shall not misrepresent the status of his Membership of the FPSB India.
Rule 606
A Member shall not misstate his authority to represent the FPSB India. 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 FPSB India, unless the Member has been duly informed to do so by the officers, directors or rules of
the FPSB India.
DILIGENCE: Rules that Relate to the Ethic of Diligence
Rule 701
A Member shall provide services diligently and on a timely basis.
Rule 702
A financial planning practitioner shall enter into an engagement only after securing sufficient information
to satisfy the Member that:
(a) The relationship is warranted by the individual's needs and objectives; and
(b) The Member has the ability to either provide requisite competent services or to involve other
professionals who can provide such services.
Rule 703
In preparing oral or written recommendations to clients, a Member shall collect sufficient information to
ensure appropriate advice can be given.
Rule 704
In preparing oral or written recommendations to clients, a Member shall conduct or have access to
research on financial strategies and products that may be appropriate to achieve the client's identified
needs and objectives.
Rule 705
In preparing oral or written recommendations to clients, a Member shall develop a suitable financial
strategy or plan for the client based on the relevant information collected and analyzed.
Rule 706
In preparing oral or written recommendations to clients, a Member must take reasonable steps to place
the client in a position to comprehend the recommendations and the basis for the recommendations. A
Member should also take due care to explain the nature of the investment risks involved in terms the
client is likely to understand.

Rule 707
A Member must ensure all significant recommendations are made in writing. If any significant
recommendations are given orally, then confirmation must be given in writing as soon as practicable.
Rule 708
A financial planning practitioner shall make and/or implement only those recommendations that are
suitable for the client and all agreed recommendations must be implemented in an accurate, efficient and
timely manner.
Rule 709
In the appropriate circumstances, Rules 703 to 706 inclusive will not apply where there is an express
documented instruction by a client to limit or restrict the scope of the financial planning service normally
offered by the Member (e.g., an execution-only transaction service or advice limited to a particular area
product or where a client refuses to provide information sought). The client must be warned prior to
implementing the relevant transactions about the consequences of the Member following these instructions.
Rule 710
A Member shall not move a client or cause a client to move from one investment to another investment
without explaining to the client, in terms that the client is likely to understand, the reasons for the move.
The Member must demonstrate that the move is appropriate for the client.
Rule 711
A member shall confirm in writing to a client where a subsequent instruction given by that client significantly
alters the financial strategy or balance of an existing portfolio under the supervision of the Member.
Rule 712
A Member shall establish and maintain written policies and procedures for the effective control and
conduct of its business. This rule does not apply to a Member with only one practicing Representative.
COMPLIANCE: Rules that Relate to the Ethic of Compliance
Rule 801
In all professional activities a Member shall perform services in accordance with:
(a) Applicable laws, rules, and regulations of governmental agencies and other applicable authorities;
and
(b) Applicable rules and other established policies of the FPSB India.
Rule 802
In determining whether a Member has complied with the FPSB India's Professional Standards, any
conduct by its Representatives or employees that relates to conduct of the Member's financial planning
business shall be treated as the conduct of the Member.
Rule 803
A Member shall use the marks in compliance with the rules of the FPSB India, as established and
amended from time to time.

Rule 804
A Member must co-operate with the FPSB India in all aspects of any investigation or compliance review
as authorized pursuant to the Constitution of the FPSB India.
Rule 805
All Members must comply with the relevant FPSB India Disciplinary Rules and Procedures concerning
complaints handling, dispute resolution and disciplinary procedures.
Rule 806
A Member who is an employee shall perform professional services with dedication to the lawful objectives
of the employer and in accordance with these rules and all laws of India.
Rule 807
A Member shall comply with all applicable post-certification requirements established by the FPSB India
including, but not limited to, payment of the annual Member fee as well as signing and returning the
certificant's statement annually in connection with the certificate renewal process.
Rule 808
A Member shall ensure that information and relevant documents given to or gathered by the Member are
securely stored to establish at any time that it has complied with the FPSB India's Professional Standards
and be available for inspection by the FPSB India when required. Such records shall be retained for
seven years from the date the document was last acted upon.
Rule 809
A Member must maintain an effective system of supervision of all Representatives' activities, performance,
training and recommendations made to clients.

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