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Crunch Time Part II: CFP Board’s ‘D-Day’

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Last week, TD Ameritrade held its annual elite advisor conference outside of Albuquerque. As you might suspect, we don’t get a lot of conferences for independent advisors out here in New Mexico, so I felt compelled to cowboy up and drive the 50 miles down to the Hyatt Regency Tamaya Resort in Santa Ana Pueblo. 

I’m glad I did. I always enjoy spending time with financial advisors; hearing about what they are doing and what they think about the current goings on in the financial world.

I also got to sit down with TD Ameritrade Institutional President Tom Nally, who was very generous with his time, as we talked about a range of current topics. One of them was TD Ameritrade’s active support for a fiduciary standard for financial advisors, including its sponsorship of the Institute for the Fiduciary Standard’s “Fiduciary September.”

“Regardless of what happens with the DOL’s new rule, the public’s awareness of the advisory fiduciary standard has definitely been raised,” Nally told me. “Both our call centers and our affiliated advisors are seeing a dramatic increase in new and existing clients asking about a fiduciary duty.”

CFP Issues

Earlier this week, the CFP Board (which TD Ameritrade sponsors) sent out a press release—“CFP Board to Release Draft of Proposed Changes to Standards of Professional Conduct on June 20, 2017.”

In what is possibly the shortest press release in history, the board said: “Certified Financial Planner Board of Standards, Inc. today announced that it will release a draft of proposed changes to its Standards of Professional Conduct on June 20, 2017. CFP Board will accept written comments and hold a series of public forums.”

Short and sweet. Yet, a skeptical mind might wonder if the board’s uncharacteristic brevity might be an attempt to downplay the stakes involved in these changes.

As I wrote in my May 10 blog (Crunch Time: New Standards Will Define the Future of CFPs), there’s a lot more riding on these changes than simply a few minor revisions: “A skeptical mind might conclude that [these ambiguities] (which befuddle even professionals) might in fact be meant to confuse financial planning clients as well.”

While these concerns — and the evidence that supports them — are troubling enough, what I didn’t write about earlier is the historical and current perspective that makes clearing up these “ambiguities” in the board’s standards of crucial importance. Of course, I’m talking about the growing public awareness of the fiduciary advisory standard and its importance to their well-being.

I’m not saying that retail investors have suddenly become legal scholars, versed in the nuances of fiduciary law (the ’40 Act, ERISA, FPA v. SEC, or Don Trone’s invented “five fiduciary levels,” etc.).

But, as Tom Nally observed — and I’ve heard from countless independent advisors — most investors today are aware of the existence of a “fiduciary standard of client care” and that it involves acting in their best interest. They also know that not everyone who calls themselves a “financial advisor” is required to live up to that standard.

I’m also not saying that the financial press (which is typically a lap or two behind the leading edge) has fully gotten their heads around all the implications of having a fiduciary standard versus not having one.

But one thing the media is good at is recognizing a trend. And the interest/demand for fiduciary advisors appears to be turning into a major trend.

In their zeal to get ahead of this trend, how long do you think it will take some of the top reporters to realize that in addition to fiduciary advisors and non-fiduciary advisors, there are also “part-time” fiduciary advisors; who potentially cause the most confusion among investors? And then, we’ll see story after story about how to spot and avoid these part-time fiduciaries because of their confusing responsibilities.

At present, due to their ultra-confused and confusing standards, CFPs would fall at the top of this list. In this era of fiduciary awareness, when those stories start to break, my guess is that it will put the entire financial planning profession on the wrong side of the conversation — right there with boiler-room operators and penny stock sales folks. And that’s not an easy place to come back from.

Those are the table stakes. If the CFP Board doesn’t get financial planners on the right side of the fiduciary issue right quick — as full-time fiduciaries — it runs the very real risk of marginalizing the entire profession, which I’ve been covering for over 30 years. 


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