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Financial Planning > Behavioral Finance

CFP Board Advises Against Advisor-Client Loans

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NU Online News Service, June 21, 11:05 p.m. – The Certified Financial Planner Board of Standards, Denver, says advisors who hold the Certified Financial Planner designation should avoid borrowing from their clients or lending to their clients.

The CFP Board’s Board of Professional Review often ends up reviewing disciplinary cases involving loans between planners and their clients, the CFP Board says.

The CFP Code of Ethics does not specifically prohibit loans between advisors and clients, but the code does require CFP advisors to act in the best interest of clients.

In cases where the client is the lender, the CFP professional review board will assume the advisor is not acting in the best interest of the client, the CFP Board says.

Loans between advisors and clients “give the appearance of impropriety and reflect negatively on the integrity of the designees, the CFP marks and the financial planning profession,” the CFP Board says.