Competence is Principle ____ of the Code of Ethics.

• A. Principle 3
• B. Principle 2
• C. Principle 4
• D. Principle 5

Answer: (A)

Competence as a principle means you must have the necessary knowledge, skills, and experience to provide financial planning services, and you must keep those abilities up to date. The standard obligates you to perform professional services only within your competence and to seek education, training, or the help of specialists when a client’s needs exceed your capabilities. You should also be honest about your limitations with clients and avoid giving advice you’re not qualified to provide.

This is why it’s the best answer: it directly addresses the professional obligation to deliver services with the appropriate level of expertise, maintaining ongoing competence through education and appropriate referrals. Acting beyond your competence can lead to incorrect guidance, client harm, and a breach of fiduciary duty. Other principles govern different duties like integrity and client interests, but competence specifically anchors the obligation to know, stay current, and work within your capabilities.