CFP Board Code of Ethics

Case Study 2: Conflicts of Interest When Dealing With Multiple Client

Husband and Wife retained a CFP professional to represent the couples combined interests, although the majority of the assets in the couples portfolio were brought to the marriage by Husband. The CFP professional advised the couple to invest the majority of the assets (over a million dollars) in an IRA in Husbands name only, with the Wife as beneficiary. The CFP professional also recommended that the residue of the couples assets be placed in a joint checking account, to address short and medium term income needs and cash management. Because the couple was happily married at the time, this did not pose an immediate problem. Wife claimed she never knew there was a separation of ownership of the couples assets into two separate accounts as the CFP professional had always corresponded with Husband and Wife regarding both accounts. Several years later, the couple began experiencing marital difficulties and started divorce proceedings. After divorce proceedings began, Wife wrote a check in an attempt to withdraw almost all of the funds from the joint account. CFP professional immediately contacted Husband and informed him that Wife was attempting to remove all of the money from the joint account and asked him if was willing to sell securities to 3 cover the check. Husband indicated that he was not, and the CFP professional directed the bank not to process the check. When Wife inquired as to whether the check had cleared, CFP professional represented to Wife that the check had cleared. The CFP professional did not inform Wife that he had contacted Husband and that Husband had refused to sell any securities to allow the check to clear.

What rule(s) of conduct were broken? Explain the rule(s) and how it was broken in the case study

How might you handle this situation differently?