Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

CFP Board Standards vs. Reg BI: A Chart Prompts Industry Chatter

Your article was successfully shared with the contacts you provided.
CFP Board CEO Kevin Keller. CFP Board CEO Kevin Keller.

Industry officials took to LinkedIn and Twitter to voice their views on the CFP Board’s recently released comparison of the board’s new fiduciary Code of Ethics and Standards of Conduct vs. the Securities and Exchange Commission’s Regulation Best Interest.

“Striking,” popular blogger and planner Michael Kitces said Saturday on both social media platforms. “@CFPBoard has put out a new guide explicitly detailing the differences between Reg BI and the new fiduciary standard for CFP professionals.”

Kitces then pondered whether CFP Board released the guide as a way “to ramp up positioning the CFP marks as a differentiator in advisor standards?”

The CFP Board notes in the comparison that its standards require “prudence, while the SEC says that prudence is covered by other terms. Any difference in the duties of care will be revealed when the SEC interprets Reg BI.”

The comparison goes on to say that “both the Code and Standards and Reg BI impose a duty of loyalty that seeks to limit the effect a conflict of interest may have on a recommendation.”

CFP Board “explicitly requires the client’s interest to come first. The SEC does not. CFP Board requires the Financial Advice to be ‘without regard’ to the interests of anyone but the client’s. The SEC does not use similar language.”

Both sets of standards took effect on June 30.

Kevin Keller, CFP Board’s CEO, told ThinkAdvisor in a Wednesday email message that while both standards “impose a ‘best interest’ standard of conduct,” there is also “an important difference in the standards of conduct: CFP Board explicitly adopted a fiduciary standard, but the SEC said that it did not.”

CFP Board’s fiduciary duty – along with the entire Code and Standards, Keller said, “is consistent with CFP Board’s mission to benefit the public. Professional bodies, such as CFP Board, exist in part to set standards that go beyond those required by the law, for the benefit of the public and the profession.”

In commenting on Kitces’ LinkedIn post, Knut Rostad, president of the Institute for the Fiduciary Standard, stated that while it’s “interesting to compare the nuances of Reg BI and CFP [Board] standards, what these differences mean for CFPs and their policies and procedures and for their customers in practical terms is unclear.”

In another comment on Kitces’ LinkedIn post, Garry Mettler, a recruiter calling himself an “Annuity Maestro,” said the comparison “just seems like so much ‘hair splitting’ to me and all this linguistic battling is causing a great source of confusion. Legally, is there such a thing as a ‘prudent professional’ standard vs a ‘reasonable person’ standard? Or are these a mere convention of terms deployed by the various battling regulatory interests with their own axes to grind? Mechanically, how is one addressed over the other? What does one mechanically do (every day steps) to operate within these two definitions that make them so [different], if differences actually exist? Let’s get down to specific mechanical differences.”

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.