More On Legal & Compliancefrom The Advisor's Professional Library
- 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.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
The CFP Board announced Friday a proposal of new rules on the continuing education requirement for CFP certificants, including a jump from 30 required hours of CE every two years to 40 hours.
In addition, under the proposed rules the Board would, for the first time, provide CE credit for practice management education, granting up to four CE hours for practice management education or pro bono work.
The Board said in a statement that the higher number of required hours came about from a “comprehensive review” of the current CE required of CFPs by the Board's Council on Education, was “consistent with recommendations” from the Board’s 2007 and 2008 Education Task Forces, and remained “consistent with or below similar requirements for established professions and comparable designations.” In addition, the Board noted that the CE requirement for CFPs has remained “largely unchanged from its introduction in the 1990s.”
When asked whether certificants had been involved in drafting the proposed rules, Michelle Warholic of the CFP Board pointed out that all the members of the Council on Education are CFP certificants. As for including practice management as an approved CE topic, Warholic, the Board's managing director for education, examinations and talent, said that "over the years, that probably has been the highest area where we received complaints and suggestions." She said the council examined how designations from other professions handled practice management as CE, and while those designations' practice management requirements "varied," the CFP Board added it to its list of approved topics in large measure because of the benefit of good practice management to end clients of CFPs.
On the increased number of hours devoted to ethics, Warholic said that the CFP Board's "last job analysis study indicated that practitioners needed to know more about ethics," not merely on general ethics education but on the specific ethical duties of CFPs, and that "the general would help enhance the specific." She also pointed out that it made sense to increase the ethics CE requirement since the initital certification requirement placed more emphasis on the topic.
The Board has instituted a 45-day public comment period ending Sept. 30, and said any amendments to the proposed rules will be presented to the CFP Board’s board of directors for final action in November. Warholic said the Council on Education may revise the proposed rules based on certificants' comments, but that "ultimately it's the board of directors" that will make the final decision.
Some of the specific new changes are:
- Increasing total CE hours required each renewal period (every 2 years) from 30 to 40 hours.
- Granting CE credit for practice management programs and/or pro bono activities, up to 4 hours (total combined) per renewal period. The Board defined practice management CE programs as those “focused on the planning, development and management of a CFP professional’s business operations, office management, business model design, budgeting processes and leadership.”
The pro bono activities must be supervised by a registered CE sponsor organization and will be accepted for one hour CE credit per 4 hours pro bono service.
- Increasing the ethics CE requirement from 2 hours to 4 hours, which shall include a mandatory CFP Board-produced ethics program (2 hours) plus 2 hours of ethics programming, which is expanded to include both preapproved programs on CFP Board’s Standards of Professional Conduct and general ethics-related content.
- Expanding the professional activities that qualify for CE credit from the current teaching and authorship activities to additional ones such as study groups and research.
- Implementing a “50% cap rule,” which will “limit CE credit for any single topic area or professional activity to 50% of total required CE hours.” A certificant could only receive up to 20 hours of the 40 required in any one of the approved topic areas for CE, such as investments or insurance. However, conferences that comprise individual educational sessions would not be subject to the cap.
- Eliminating CE credit for completing professional licenses and designation exams.
Comments may be sent to CFP Board by e-mail to CEComments@cfpboard.org or by regular mail to Ms. Warholic at the CFP Board at 1425 K St., NW #500, in Washington, DC 20005. Click here to read the full proposal.