💡 What Must a Financial Planner Disclose to Clients? A Real CFP®-Style Scenario

At Miso Money, we believe financial education should be real, practical, and rooted in everyday situations. So here’s a question straight out of a financial planner’s world—and if you’re studying for your CFP® or just want to understand how financial advisors should operate, this one’s for you.

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📘 Scenario:

A young couple wants to save for their child’s future college expenses. They decide to work with a financial planner. What is the planner required to disclose during their engagement?

Which of the following is correct?

A. How the client pays for products, services, and additional incurred costs including surrender charges and sales loads ✅
B. A written description of conflicts of interest along with a written confidentiality statement
C. Future investments or mutual funds
D. List of client references

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✅ Correct Answer: A

Under the CFP® Board’s Code of Ethics and Standards of Conduct, a financial planner is required to disclose how clients pay for services. This includes:

• Fees charged directly
• Commissions from product sales
• Other product costs such as surrender charges or sales loads

This ensures transparency so clients understand the true cost of working with a planner, and it helps prevent misunderstandings or hidden fees.

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❌ Why the Other Options Are Incorrect:

B. While conflicts of interest and confidentiality are critical issues, a written statement isn’t always required. What’s important is that any conflict that could affect the relationship must be disclosed in a clear and timely way—but it doesn’t have to be in writing unless it’s material to the engagement.

C. Talking about future investments or specific mutual funds is speculative. A good financial planner first understands the client’s goals, risk tolerance, and situation before making any recommendations.

D. Listing previous client references is not a requirement under the CFP® Board standards. Some professionals may offer it voluntarily, but it’s not part of the required disclosures.

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🎓 What You Can Learn From This:

Whether you’re working with a financial planner or becoming one, this scenario is a great reminder of the ethical responsibilities involved. Always ask how you’re paying, what fees may apply, and make sure you’re comfortable with the transparency your advisor provides.

The right financial planning relationship is built on clarity, trust, and open communication—and that starts with the disclosures at the very beginning.