More On Legal & Compliancefrom The Advisor's Professional Library
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
A host of the leaders of the financial planning profession--past and present--have signed a letter addressed to the CFP Board of Standards expressing their opposition to the Board's proposed changes to its Code of Ethics as "so potentially detrimental to the mark, the profession and the public interest, that it is imperative we emphasize our collective concern." The letter, over the names of such luminaries as Harold Evensky, Elissa Buie, Ben Coombs, Jim Barnash, and Roy Diliberto, notes that many of the individuals have already expressed their individual concerns about the proposed changes, first floated in July, to the Board. Mincing no words, the letter goes on to say "we believe that the effective elimination of many practice stand requirements, the weakening of others and the proposed weak "prudent person" fiduciary standard, coupled with an unacceptable "opt out" provision, is not in the interest of consumers and devalues the economic significance of the CFP mark."
The Financial Planning Association had voiced its official opposition to the changes on September 25 in a letter from current FPA President Dan Moisand (also a signatory to the October 11 letter) to Barton Francis, chair of the CFP Board. The FPA said the proposed revisions "fail to enhance consumer protections or advance the profession of financial planning." It called for the proposals to be "withdrawn, redeveloped with a more inclusive process, and resubmitted to the public and certificants for further comment."
The Board closed its comment period on the proposed changes on September 25, and said it would consider the hundreds of comments it received at its October Board of Governors meeting.