Certified Financial Planner ~ Proposed Code of Ethics and Standards of Conduct
The Certified Financial Planner Board of Standards seeks feedback on its new, 17 page draft proposal entitled Code of Ethics and Standards of Conduct. If approved, it would require Certified Financial Planner professionals (“CFP® pros”) to act as fiduciaries—put a client’s interest first—at all times. It would also update the standards related specifically to financial planning.
- A video is available at www.CFP.net/proposed-standards.
- Comments are due August 21, 2017
Highlights of Proposed Changes
- A broader fiduciary standard that requires CFP® professionals to act in the best interest of the client at all times:
- The draft requires a CFP® pro to act in the best interest of the client when providing financial advice to a client. Note, under the current Standards, CFP® pros are required to act as a fiduciary when providing financial planning.
- A shorter definition of financial planning and a presumption that financial planning is required:
- The draft defines financial planning 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.”
- The draft sets forth a presumption that CFP® pros are required to provide financial planning when providing financial advice.
- More specific Practice Standards for the delivery of financial planning:
- The draft updates the Practice Standards with the financial planning process beginning after the engagement has been formed and with goals selected after the CFP® pro understands the client’s personal and financial circumstances.
- A revised process for addressing bankruptcies:
- The draft includes bankruptcies as a type of adverse conduct to be handled through the disciplinary process (returning CFP Board to the process in place before 2012).
- The draft includes an easier-to-read document for both the public and CFP® profs.
The 60-day comment period ends Monday, August 21, 2017.
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