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Regulation and Compliance > Federal Regulation > SEC

CFP Board May Revise New Fiduciary Standard if SEC Sets Higher One: Keller

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As certified financial planners continue to digest the Board of Standards’ just-approved expansion of their fiduciary obligations to all types of financial advice, the CFP Board may be open to further changes if the Securities and Exchange Commission’s forthcoming fiduciary rule “sets a higher standard,” said Kevin Keller, CFP Board’s CEO.

The new Code of Ethics and Standards of Conduct, released Thursday, “reflect more than two years of work and multiple opportunities for input from a variety of stakeholders,” Keller told ThinkAdvisor in an email message Thursday. “We do not anticipate making any changes to the just-announced Standards that would alter the requirement that CFP professionals adhere to a fiduciary duty at all times when providing financial advice.”

That said, Keller stated that should the SEC “set a higher standard, we would look at revisiting our Standards.” CFP Board also believes, Keller added, “that our Standards can serve as a reference for the SEC’s own rulemaking. The public would be well-served by the SEC acting quickly.”

CFP Board’s board approved the second installment of revisions to its Standards, expanding a fiduciary duty to CFPs rendering all types of financial advice. The previous standards held CFPs to a fiduciary standard only when providing financial planning.

Richard Salmen, the board chairman, said on a Wednesday morning call with reporters that the board “unanimously” approved the new standards requiring CFPs to “at all times” act as a fiduciary when providing financial advice to a client.

Merrill Lynch commented Thursday that as a “leading employer” of CFP certificants, the broker-dealer “appreciates the CFP Board’s leadership in helping us elevate the standards for the profession, as well as [the Board’s] delayed implementation approach, which allows time for coordination with evolving regulatory expectations.”

The Securities Industry and Financial Markets Association and other broker-dealers have complained in comment letters to the CFP Board that its standards are “premature” and will likely sow confusion once an SEC fiduciary plan is released.

“Unlike the CFP Board proposal, the SEC’s best interest standard will apply to all financial advice provided by all brokers not just those with the CFP designation,” SIFMA said in its late January comment letter. “The SEC standard will almost certainly have some formulation of a duty of care, a duty of loyalty, and enhanced up-front disclosures. It is possible that many, if not most or all, of the CFP Board’s concerns that precipitated its rule proposal would be addressed by the SEC’s new standard.”

SIFMA added: “There is no good reason not to wait and see, and thereby avoid imposing conflicting, duplicative or unnecessary additional compliance burdens on CFP certificants and their firms.”

Salmen said Wednesday that the CFP Board, as a standard-setting body, has “an obligation to set these standards,” and that the Board has been “on a two-year journey to update our standards and that doesn’t depend on” an SEC standard.

“Whatever the SEC comes out with, we’ll deal with,” Salmen said.

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