The American Council of Life Insurers is asking the Certified Financial Planner Board of Standards to keep the language in a proposed revision to its code of conduct as narrow as possible.
Use of the term “client” and the rules for determining when a planner must meet a strict “fiduciary standard” may be too broad, Carl Wilkerson, a vice president at the ACLI, Washington, writes in the ACLI’s comment letter.
The ACLI is weighing in because many CFP designation holders also hold life insurance agent or broker licenses.
Under the terms of the code of conduct draft released by the CFP Board, Denver, “the proposed definition of ‘client’ would include every professional engagement rendered by a certificant, even when it did not involve the delivery of the investment advisory services or financial planning,” Wilkerson writes.
The ACLI would like to see the CFP Board use a definition of “financial planning” that would be similar to the definition of “investment adviser” used in the U.S. Securities and Exchange Commission’s new Rule 202(a)(11)-1, Wilkerson writes.
The proposed definition of “client” should be adjusted to denote a “person, persons or entity that form[s] a financial planning engagement with a certificant,” Wilkerson writes. “Where the certificant forms a financial planning engagement with an entity (corporation, trust, partnership, estate, etc.), the client is the entity acting through its legally authorized representative.”
Another provision of the CFP proposal, dealing with disclosure requirements, seems to be aimed at planners who are sole proprietors, and it might create unnecessary paperwork for insurance company producers who already must send out insurance company disclosure forms, Wilkerson writes.