The Code of Ethics Business Manual

92 Pages·2016·9.91 MB·English

The Code of Ethics
Business Manual
for
CFP® Professionals
Authored by:
Anton Swanepoel, CFP®
Wouter Fourie, CFP®
Based on the Revised FPI Code of Ethics and
Practice Standards Incorporating The FPI Rules
of Professional Conduct
It’s not
just money.
It’s your
money.
You don’t sit around waiting for money to fall into your lap.
You go out there and you earn it. You roll up your sleeves and
get stuck in. It’s not always easy, but that’s just the way it is.

You work hard for your money. If you’re thinking of investing,
visit becauseitsyourmoney.com
8020941/FM/EWORK BBDO
NET#
Coronation is an authorised fi nancial services provider and approved manager of collective investment schemes. Trust is Earned™.
- Mark Twain
Disclaimer
The views expressed in this book represent the opinions of the authors. The Financial Planning
Institute does not warrant or assume any legal liability or responsibility for the quality, accuracy,
completeness, legality, reliability or usefulness of any information, product or service represented
within this book or digital versions thereof. Anyone using the information in this book, whether
it be legal, business or other, does so at their own risk, and by using such information agrees to
indemnify the Financial Planning Institute from any and all liability, loss, injury, damages, costs
and expenses (including legal fees and associated expenses) arising from such use.
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Code of Ethics Business Manual for CFP® Professionals, Incorporating Practice Standards and Rules of Conduct
CFP® certification:
The Recognised Standard of
EXCELLENCE
in Financial Planning
and acknowledge FPI’s right to enforce them through its
Disciplinary Regulations and procedures. It is this adherence,
coupled with rigorous competency standards set by FPI,
over time that has allowed the CFP® mark, and other FPI
certification marks, to become recognised as the standard of
excellence in financial planning and advice.
FPI, as evidenced by its vision of professional financial
planning for all, believes that the public deserves high-
quality personal financial planning and advisory services
Thank you for your interest in learning more about the delivered by professionals who have demonstrated the
code of ethics for financial planners and advisors. ability to provide competent and ethical services to clients.
In this sense, the FPI Code represents a major cornerstone
This manual, The Code of Ethics Business Manual for CFP® to the practice of professional financial planning.
Professionals, commissioned by FPI, is designed to help our
CFP® professionals gain a better understanding of the FPI In an increasingly competitive world, and as financial planning
Code and also helps show them how they could incorporate makes its steady forward journey towards attaining strategic
the Code in their businesses and daily lives. It strives to parity with established professions such as medicine and
compare the FPI Code of Ethics and Practice Standards engineering, we believe that living the spirit and letter of the
with the FAIS General Code of Conduct (as referred to in FPI Code is now an important way for competent and ethical
the manual) and to assist financial planners and financial financial planners to distinguish themselves from their peers.
advisors to comply with both codes. We therefore encourage every CFP® professional and all other
professionals affiliated to FPI to study the content of this
FPI’s Code of Ethics and Practice Standards serves to manual thoroughly.
establish the highest ethical principles and standards
and it is centred on the following eight principles: Client A special thanks and congratulations to the authors for
First, Integrity, Objectivity, Fairness, Professionalism, their time and expertise in putting together this manual.
Competence, Confidentiality, and Diligence. These I have enjoyed reading it and trust that you will find
principles are general statements expressing the ethical its content useful as well as easy to understand and
and professional ideals CFP® professionals and other apply. Special thanks also to our sponsors, for without
professionals affiliated to FPI are expected to display their support we would not have been able to print and
in their professional activities. The Code reflects FPI’s distribute this manual.
recognition of its members’ responsibilities to the public,
clients, colleagues and employers.
Through affiliation with FPI and its certification marks, Godfrey Nti
individuals and entities agree to adhere to the high
ethical and practice standards outlined in the Code Chief Executive Officer Financial Planning Institute (FPI)
3
Code of Ethics Business Manual for CFP® Professionals, Incorporating Practice Standards and Rules of Conduct
Harvey/E
mer
Morti Invest in a brighter
3/
3
3
9
5
future, tax-free.
Set up your own investment portfolio, while ensuring that neither the income (interest or
dividends) nor the capital gains earned are taxed (provided you stay within the annual and
lifetime thresholds).
• Invest up to R30 000 a tax year (from 1 March to 28 February) and R500 000 in your lifetime
• Build your portfolio from a wide range of unit trusts and Exchange Traded Funds (ETFs)
• Enjoy flexible terms, contributions and the ability to make portfolio adjustments.
Whether you’re a private investor or an adviser, contact Absa Investment Management
Services today.
0860 000 005 | [email protected] | absa.co.za
Give yourself more. Prosper.
Absa Investment Management Services Proprietary Limited Reg No 1980/002425/07 Authorised Financial Services Provider
Terms and conditions apply
Contents
Harvey/E
mer
Morti Invest in a brighter
3/
3
3
9
5
future, tax-free.
Preamble to the Code of Ethics Business Manual for CFP® Professionals 7
The significance of trust in the business of financial planning 8
Preamble of the FPI Code of Ethics 15
Definitions 16
Introduction to the Code of Ethics 19
Principle 1 – Client first 22
Principle 2 – Integrity 26
Principle 3 – Objectivity 30
Principle 4 – Fairness 34
Principle 5 – Competence 38
Principle 6 – Confidentiality 46
Principle 7 – Diligence 48
Principle 8 – Professionalism 51
A professional member’s guide to displaying professional ethics 54
Practice Standards 56
Practice standard – Step 1: Client engagement 62
Practice standard – Step 2: Collecting client information 67
Practice standard – Step 3: Analyse and assess the client’s financial status 69
Set up your own investment portfolio, while ensuring that neither the income (interest or
dividends) nor the capital gains earned are taxed (provided you stay within the annual and Practice standard – Step 4: Identify suitable strategies, recommendations and solutions 71
lifetime thresholds).
Practice standard – Step 5: Implement recommendations 75
• Invest up to R30 000 a tax year (from 1 March to 28 February) and R500 000 in your lifetime Practice standard – Step 6: Review client’s situation 77
• Build your portfolio from a wide range of unit trusts and Exchange Traded Funds (ETFs)
• Enjoy flexible terms, contributions and the ability to make portfolio adjustments. General professional conduct rules 80
About the authors 87
Whether you’re a private investor or an adviser, contact Absa Investment Management
Services today.
0860 000 005 | [email protected] | absa.co.za
Give yourself more. Prosper.
Absa Investment Management Services Proprietary Limited Reg No 1980/002425/07 Authorised Financial Services Provider
Terms and conditions apply
It’s not
just money.
It’s your
money.
You don’t sit around waiting for money to fall into your lap.
You go out there and you earn it. You roll up your sleeves and
get stuck in. It’s not always easy, but that’s just the way it is.

You work hard for your money. If you’re thinking of investing,
visit becauseitsyourmoney.com
8020941/FM/EWORK BBDO
NET#
Coronation is an authorised fi nancial services provider and approved manager of collective investment schemes. Trust is Earned™.
Preamble to the
Business Manual
Philosophy referred to in this manual should instil the
The Financial Planning Institute of Southern Africa necessary confidence in members, because it
(FPI), a South African Qualifications Authority provides proven conduct standards. It should
(SAQA) recognised Professional Body and an further stimulate a desire for ethical behaviour,
affiliate of the Financial Planning Standards Board sound decision-making and professional conduct,
(FPSB), published its revised Code of Ethics and because these fundamentals have always laid the
Practice Standards Incorporating the FPI Rules of foundation for success over the long term.
Professional Conduct (the code) towards the end
of 2015. The said code aims to protect clients The format of the manual
and society at large by guiding their members The natural reaction of any financial advisor/planner,
to conduct themselves ethically in that the code when reading through a rule book, is to experience
gives members clear conduct boundaries and it the heavy burden of compliance. The reason for that
encourages ethical awareness and decision-making. is because the focus of a rule book is on the advisor/
planner and any non-compliance is usually met with
Some commentators hold the view that the FPI severe penalties. One of the objectives of this manual
Code of Ethics is another set of rules, in addition to however, is to change the perspective of the reader
FAIS, for financial planners and advisors to comply by focussing on the client. This could be done quite
with. This statement cannot be further from the effectively by answering the following question after
It’s not truth. The FPI Code of Ethics predates the FAIS Act reading the rules or principles contained in the Code:
“
If I do what the Code of Ethics and Practice Standards prescribe,
would it enhance the professional relationship between the client and
just money.
”
advisor and would it lead to trust?
and has also been a guide for members on how to If the answer is yes, we would argue that the
engage with their clients in order to demonstrate Revised Code of Ethics is not just another rule
It’s your
trust. The 2015 revision, which includes practice book, but rather a valuable business guide
standards aligned to the six step financial planning that will assist financial advisors/planners in
process, has further enhanced this function. establishing the most valuable ingredient in any
professional relationship – trust! In this manual
money.
The purpose of the manual we will test every rule and principle against this
The Code of Ethics Business Manual for CFP® outcome and we believe that we will be able to
Professionals highlights the significance of the demonstrate beyond any shadow of doubt that
revised code of ethics and its importance in the the Code of Ethics offers a sound framework for
establishment of trust between financial advisors/ professional client engagement and valuable
planners and their clients. The fundamentals building blocks in the establishment of high trust
You don’t sit around waiting for money to fall into your lap.
provided by world-leading business authors professional relationships.
You go out there and you earn it. You roll up your sleeves and
get stuck in. It’s not always easy, but that’s just the way it is.
As a financial advisor, trust is part of the job description; an economic necessity.

Every service, every relationship, every transaction is based on trust.1
You work hard for your money. If you’re thinking of investing,
visit becauseitsyourmoney.com Stephen MR Covey,
Author of The New York Times bestseller The Speed of Trust
8020941/FM/EWORK BBDO 1Swanepoel 2009: Essential habits of trusted advisors
NET# CODE OF ETHICS BUSINESS MANUAL FOR CFP® PROFESSIONALS, INCORPORATING PRACTICE STANDARDS AND RULES OF CONDUCT 7
Coronation is an authorised fi nancial services provider and approved manager of collective investment schemes. Trust is Earned™.
The significance
of trust in the
business of
financial planning
The financial services industry in South Africa Stephen M.R. Covey’s explanation of the significance
is a very competitive industry where clients of trust in business will be extremely beneficial to
have a wide range of advisors/planners and every advisor/planner, because it is simple, logical
product suppliers to choose from and it is important and it offers a profound formula for success in all
to recognise that eventually clients decide on the industries. Covey observed that trust always affects
provider or supplier they trust most. According to two outcomes – speed and cost. When trust goes
Bob Burg in The 100 Greatest Sales Tips of all Time we down, the speed (of any agreement or transaction)
should all- will also go down and cost will go up.

Trust Speed Cost
 
“
Internalise the golden rule that says,
We have tested this principle with thousands of
“All things being equal, people will do
people in South Africa during presentations and
business with, and refer business to, those
workshops over the years and they all agree that, if
people they know, like and trust.2 ” there is no trust in the interaction process between
them and their clients, the engagement process is
2L. Pockell & A. Avila: The 100 Greatest Sales Tips of All Time, PPPP: Warner Business Books 2006, p 34
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Code of Ethics Business Manual for CFP® Professionals, Incorporating Practice Standards and Rules of Conduct