The Certified Financial Planner Board of Standards began enforcing its new Code of Ethics and Standards of Conduct on June 30, 2020. This means a CFP is obligated to act as a fiduciary and in the best interest of his or her client at all times when providing financial planning or advice.
Failure to comply may result in disciplinary action based on the CFP Board’s new Procedural Rules, also effective June 30, 2020.
Among other changes, the CFP Board’s revisions to the Code and Standards require a CFP to:
• Obtain the information necessary to review and analyze the client’s personal and financial circumstances prior to determining their financial planning goals;
• Document the facts and circumstances they gathered or provided to the client when giving advice, including recommendations, and retain that information;
• Analyze and document the client’s current course of action and provide potential alternatives, develop financial planning recommendations and present the recommendations to the client;
• When engaged for monitoring, the CFP should document and retain his/her analysis of the client’s progress towards achieving those goals;
• If they specifically exclude monitoring and implementation as part of their engagement, they must complete, at least, the first five steps of the financial planning process. Otherwise, they must complete all seven steps of the financial planning process;
However, when engaged for monitoring and updating, a CFP must:
a) Document which actions, products and services are and are not subject to the their monitoring responsibility;
b) Determine how and when they will monitor actions, products and services;