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June 20, 2017 at 06:12 AM
The draft of proposed changes to the CFP Board’s Standards of Professional Conduct released Tuesday for a 60-day public comment period “strengthens” the fiduciary standards CFPs’ must adhere to, requiring CFPs to act as fiduciaries “at all times,” said Leo Rydzewski, CFP Board’s general counsel.
In a Monday conference call with ThinkAdvisor to discuss the draft plan, Rydzewski explained that the updated standards go beyond the fiduciary parameters when CFPs engage in financial planning and attaches fiduciary standards “to all financial advice.”
Blaine Aikin, executive chairman of Fi360 who leads the CFP Board’s board of directors, stated on the conference call that the Commission on Standards, appointed by CFP Board in December 2015, has “done an impressive amount of work” on revising the standards over the last 18 months.
Advisors can submit comments online until Aug. 21 or register to attend one of eight public discussions nationwide. The forums will take place on July 24 in Tampa, Florida, and Atlanta; on July 25 in New York and Detroit; on July 26 in St. Louis and Dallas; and on July 27 in Phoenix and San Diego, California.
“Almost a decade ago, CFP Board took at the time a bold step” in introducing a fiduciary standard for CFP professionals, said Kevin Keller, CFP Board’s president and CEO, on the conference call.
“It’s now time to update these standards,” Keller said. “These revisions will help keep CFP certification as the recognized standard for competent and ethical financial planning.”
Aikin added that the proposed revised standards are “independent of the [fiduciary recommendations] set out in the Department of Labor’s rule,” but that “the regulatory developments that have occurred regarding fiduciary advice have been informative and informed some of the language,” in CFP Board’s proposed revised standards.
The standards also put forth a “clearer description” of financial planning and when financial planning is required, incorporating a “new definition” of financial planning that is intended to be brief and comprehensive.
Financial planning is defined as “a collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances.”
Also revised is the Board’s process for addressing bankruptcies. The proposed standards includes bankruptcies among the types of “adverse conduct to be handled through the disciplinary process, thereby returning CFP Board to the process that was in place prior to 2012.”
