Certified Financial Planner (CFP) Exam 2025 – 400 Free Practice Questions to Pass the Exam

The standard of care for a CFP® professional when executing a life insurance policy for a non-client includes the expectation to act as a fiduciary. This means that the financial planner must prioritize the best interests of the individual involved in the transaction, providing advice and recommendations that align with their needs and circumstances, regardless of whether they are a formal client.

Acting as a fiduciary entails a duty of loyalty and care, which is fundamental in ensuring that all actions taken are in the best interest of the person receiving the services. This responsibility extends beyond just clients and includes anyone who relies on the CFP® professional's expertise. It ensures that the non-client, like a potential policyholder or beneficiary, receives fair and appropriate guidance when it comes to life insurance matters.

In contrast, meeting state insurance suitability duty requirements pertain more to regulatory compliance rather than the broader fiduciary obligation. Following the prudent investor rule is relevant in contexts involving investment portfolios and does not specifically relate to life insurance execution. The option of only providing policies to clients does not address the responsibility a CFP® professional has towards non-clients when they seek guidance or service. Thus, the fiduciary standard is vital in establishing trust and ensuring ethical behavior in the financial planning profession.