Certified Financial Planner Board of Standards Inc. - Financial Planning Practice Standards

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Practice Standards

Financial Planning Practice Standards

Financial Planning Practice Standards Overview
100 Series: Establishing and Defining the Relationship with the Client
200 Series: Gathering Client Data
300 Series: Analyzing and Evaluating the Client's Financial Status
400 Series: Developing and Presenting the Financial Planning Recommendation
500 Series: Implementing the Financial Planning Recommendation(s)
600 Series: Monitoring

Overview

Statement of Purpose for Financial Planning Practice Standards

Financial Planning Practice Standards are developed and promulgated by Certified Financial Planner Board of Standards Inc. (CFP Board) for the ultimate benefit of consumers of financial planning services.

These Practice Standards are intended to:

Assure that the practice of financial planning by CERTIFIED FINANCIAL PLANNER™ professionals is based on established norms of practice;
Advance professionalism in financial planning; and
Enhance the value of the financial planning process.

History of Practice Standards

CFP Board is a professional regulatory organization founded in 1985 to benefit the public by establishing and enforcing education, examination, experience and ethics requirements for CFP® professionals. Through its certification process, CFP Board established fundamental criteria necessary for competency in the financial planning profession. Through its Code of Ethics and Professional Responsibility (Code of Ethics), CFP Board has identified the ethics standards to which financial planning professionals should adhere.

In 1995, CFP Board established its Board of Practice Standards composed exclusively of CFP® practitioners, to draft standards of practice for financial planning. The Board of Practice Standards drafted and revised the standards considering input from CFP® certificants, consumers, regulators and other organizations. CFP Board's Board of Governors adopted the revised standards.

Description of Practice Standards

A Practice Standard establishes the level of professional practice that is expected of CFP Board designees engaged in financial planning.

Practice Standards apply to CFP Board designees in performing the tasks of financial planning regardless of the person's title, job position, type of employment or method of compensation. Compliance with the Practice Standards is mandatory for CFP Board designees, but all financial planning professionals are encouraged to use the Practice Standards when performing financial planning tasks or activities addressed by a Practice Standard.

Conduct inconsistent with a Practice Standard in and of itself is neither intended to give rise to a cause of action nor to create any presumption that a legal duty has been breached. The Practice Standards are designed to provide CFP Board designees a framework for the professional practice of financial planning. They are not designed to be a basis for legal liability.

Practice Standards are not intended to prescribe the services to be provided or step-by-step procedures for providing any particular service. Such procedures may be provided in practice aids developed by various financial planning organizations and other sources.

Practice Standards were developed for selected financial planning activities identified in a financial planner job analysis first conducted by CFP Board in 1987, updated in 1994 by CTB/McGraw-Hill, an independent consulting firm, and again in 1999 by the Chauncey Group. The financial planning process is defined as follows:

Financial Planning Process	Related Practice Standard
1. Establishing and defining the relationship with a client	100-1 Defining the Scope of the Engagement
2. Gathering client data	200-1 Determining a Client's Personal and Financial Goals, Needs and Priorities
	200-2 Obtaining Quantitative Information and Documents
3. Analyzing and evaluating the client's financial status	300-1 Analyzing and Evaluating the Client's Information
4. Developing and presenting financial planning recommendations	400-1 Identifying and Evaluating Financial Planning Alternative(s)
	400-2 Developing the Financial Planning Recommendation(s)
	400-3 Presenting the Financial Planning Recommendation(s)
5. Implementing the financial planning recommendations	500-1 Agreeing on Implementation Responsibilities
	500-2 Selecting Products and Services for Implementation
6. Monitoring	600-1 Defining Monitoring Responsibilities

Format of Practice Standards

Each Practice Standard is a statement regarding an element of the financial planning process. It is followed by an explanation of the Standard, its relationship to the Code of Ethics, and its expected impact on the public, the profession and the practitioner.

The Explanation accompanying each Practice Standard explains and illustrates the meaning and purpose of the Practice Standard. The text of each Practice Standard is authoritative and directive. The related Explanation is a guide to interpretation and application of the Practice Standard based, where indicated, on a standard of reasonableness, a recurring theme throughout the Practice Standards. The Explanation is not intended to establish a professional standard or duty beyond what is contained in the Practice Standard itself.

Compliance with Practice Standards

The practice of financial planning consistent with these Practice Standards is required for CFP Board designees. Enforcement is based on the disciplinary rules and procedures established by CFP Board and administered by CFP Board's Board of Professional Review and Board of Appeals.