medium · Certified Financial Planner Risk Management
Mr. Novak, a CFP® professional, is asked by a long-time client to provide a personal loan of $15,000 to help the client cover a temporary business liquidity gap. Under the Standards of Conduct
Which action should Mr. Novak take?
- Refuse the request, as borrowing from or lending to a client is prohibited unless specific narrow exceptions are met.
- Provide the loan at a market-competitive interest rate and document the agreement in writing.
- Execute the loan only after obtaining written informed consent from the client regarding the potential conflict of interest.
- Refer the client to a local bank for a bridge loan to avoid a direct conflict of interest.
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