Certified Financial Planner (CFP) Exam 2026 – 400 Free Practice Questions to Pass the Exam

The correct choice highlights a practice that is not aligned with ethical standards for a CFP® professional. While informing clients of employer layoffs might seem like a gesture of goodwill, it can cross ethical lines if it involves disclosing sensitive information that could harm someone's professional standing or create unnecessary concern. Ethical practice in financial planning requires fidelity to confidentiality and loyalty to clients, where breaching this can undermine trust and a professional's integrity.

In contrast, avoiding service outside one’s expertise is an ethical commitment to serve clients competently and responsibly, thereby protecting clients from potential harm caused by inexperienced advice. Disclosing client records for legal protection is also ethical, provided it complies with laws and regulations that protect client confidentiality while ensuring that the financial planner isn't complicit in any wrongdoing. Lastly, charging higher fees isn't unethical by itself, as fees can vary based on the level of service provided, but they should always be justified and disclosed transparently to clients, ensuring that clients understand the value they receive.