Comments on Exposure Draft (A-C)

On July 24, 2006, CFP Board released an Exposure Draft of proposed revisions to its Code of Ethics and Professional Responsibility and Financial Planning Practice Standards for a 60-day public comment period.

The individuals listed below submitted comments, and the content of the comments is available below for writers with last names (or organization names) beginning with the letters A through C.

Return to the main index of comments


LAURIE ADAMS, CFP®, CLU, LUTCF

Subject: Code of Ethics Change

Please reconsider the proposed change in our code of ethics as I believe it is a dilution of our standards at the worst time possible. The high number of individuals pursuing the designation and the heightened activity in the financial services industry due to the impact of the aging population is likely to present greater than ever practice scrutiny. Our ability to distinguish ourselves from the masses masking themselves as financial planners in an attempt to mislead consumers is crucial; and, the fiduciary relationship is the linchpin in explaining that difference.

The CFP Board has done such an outstanding job of educating the public about the importance of utilizing a well trained ethical advisor that the designation has become synonymous with integrity. It will muddy the waters if consumers can't count on CFP professionals to consistently act in their best interest and ultimately devalue the designation for those of us who do maintain high fiduciary standards.

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FRANK AKRIDGE, CFP®, CCO

Subject: proposed rule changes

Following are my thoughts on the proposed changes to the code of ethics:

1."Certificant" should not be used by anyone who is not active and current. Otherwise, why comply with the code?

2. Under 1.1 "scope of the engagement" in financial planning, it seem very vague. "scope,nature, content of the engagement" ? Either leave it out or be specific.

3. Leave rule 302 as is, physicians do it all the time.

4. Rule 2.2 leaves a loophole for brokers to not disclose. Stay with the original 403 wording

5. Keep rule 408

6. Keep rule 704, we should be held accountable for knowing the products/services.

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RICHARD ALMEIDA, CFP®

Subject: Proposed Code of Conduct

I am concerned that the "opt-out" provision of 1.1e. creates an irreconcilable split between holders of the CFPCFP® mark that cannot (and should not) be accommodated in the organization. Possibly worse, the provision does nothing to help the client understand the issue of fiduciary care.

I suggest the Board replace the paragraph with a requirement for specific disclosure in the agreement of conflicts implicit in the form of compensation received by the certificant. This is similar to the discussion required in 1.2b.&c. but would be more detailed, and included in the written agreement itself. Emphasis would have to be placed on compensation received from any source other than the client.

The changes I am suggesting would not only make the client more aware of conflicts that could impair the certificant's objectivity, but also provide an opportunity for a commission-based certificant to make a case for his or her form of compensation.

See also comment from Balliett Financial Services, Inc.

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CARL B. WILKERSON ON BEHALF OF AMERICAN COUNCIL OF LIFE INSURERS

Re: Proposed Revisions to Certified Financial Planner Board Standards

We greatly appreciate the opportunity to comment on the CFP Board's Exposure Draft of proposed revisions to its Code of Ethics and Professional Responsibility and Financial Planning Practice Standards. ACLI is a national trade association with 377 members that account for 91 percent of the industry's total assets, 90 percent of life insurance premiums, and 95 percent of annuity considerations.

Many of our members companies offer and distribute life insurance, annuities and other products through affiliated and independent distributors, including broker-dealers. Many insurance salespersons have attained specialized professional designations, such as the CFP Board's Certified Financial Planner (CFP) designation. We are greatly interested, therefore, in the proposed revisions circulated in the Exposure Draft.

According to the CFP Board's overview, the proposed revisions retain the content of the current Code and Practice Standards while implementing clarifications and structural enhancements. The Exposure draft also introduces several new provisions, including the legal standard governing the relationship between certificants and clients, and a requirement to memorialize financial planning engagements in writing.

Our members support the core objectives of the CFP Board focusing on education, examination, experience and ethics. The CPF designation is a benchmark of professionalism and ethical conduct shared by a significant number of salespersons affiliated with life insurers.

We offer a number of recommendations to refine the scope and application of the proposed revisions in a manner supporting the CFP Board's objectives fairly and appropriately for all certificants. We also suggest several modifications concerning terminology, disclosure, and memorialization of the engagement.

Scope of the Proposed Rules of Conduct

Our members have expressed concern that the proposed revisions have an excessive, but unintended, scope. Several obligations under the initiative are triggered by the term "client." The Exposure draft provides that "client denotes a person, person, or entity who engages a certificant and for whom professional services are rendered for compensation." Salespersons affiliated with life insurers can, and do, perform a variety of functionally separate financial services for customers. In some instances, life insurance agents may function exclusively as an insurance and annuity salesperson, and in other situations may function exclusively as a registered representative of a broker-dealer in the sale of a security. In other arrangements, the agent may trigger the definition of investment adviser under the Investment Advisers Act of 1940 and the rules thereunder.

Appropriate regulatory obligations apply in each instance depending on the functions performed by the agent. Sometimes the agent is simply engaged in insurance sales activities, while at other times they are exclusively engaged in investment advisory activities or broker-dealer functions. Each different function triggers different regulatory responsibilities. Salespersons can perform a variety of separate functions for clients under various different arrangements. In short, not every insurance or every securities sale involves investment advice subject to the Investment Advisers Act and its applicable fiduciary standards.

As threshold in applying the Rules of Conduct, the proposed definition of "client" would include every professional engagement rendered by a certificant, even when it did not involve the delivery of investment advisory services or financial planning. We believe this is an unintended consequence of the proposed modifications contrary to the intentions of the CFP Board that should be corrected.

In solution, we recommend that the proposed definition of "client" be revised to provide:

"Client" denotes a person, persons or entity that form[s] a financial planning engagement with a certificant. Where the certificant forms a financial planning engagement with an entity (corporation, trust, partnership, estate, etc.), the client is the entity acting through its legally authorized representative.

Our recommended revisions would apply the Rules of Conduct to CFP certificants involved in financial planning engagements; other functions performed by CFP certificants would not be drawn collaterally into the Rules of Conduct under our recommended refinements.

Along the same lines, a similar change should be incorporated in Rule of Conduct 1.1(e) so that it does not capture professional judgments made by a CFP certficiant engaged in financial service activities other than financial planning. Accordingly, the provision should be amended as follows:

Whether the certificant will be held to the duty of care of a fiduciary under the agreement. It will be presumed that the duty of care of a fiduciary is to be applied to the professional judgments related to a financial planning engagement made by the certificant pursuant to the agreement unless the parties specify in their agreement a different legal standard governing these actions.

Legal Standards Governing the Client Engagement

The draft Rules of Conduct would require certificants to indicate what, if any, legal standard will govern the client engagement; if one is not specified or waived, a default standard of fiduciary duty would become operative. The Board's overview explains that the default concept is "designed to impose the fiduciary standard of care where it is most needed and avoid imposing it where it is either not needed or inappropriate." The overview further explains that the proposed Rules of Conduct apply to anyone entitled to use the CFP designation, including individuals for whom it would be inappropriate to impose a fiduciary standard because they do not have the information, role or responsibility for which it is relevant.

The proposed fiduciary standard presents several challenges. Individuals subject to the Investment Advisers Act of 1940 fulfill a fiduciary duty established by statute that is extensively augmented by SEC and judicial interpretations. Registered Investment Advisers may not waive fiduciary duty or negotiate a lesser standard. The approach taken in the proposal may, therefore, conflict with the Investment Advisers Act. We do not believe this was the intention of the CFP Board. The CRP Board's overview appears to recognize that CFP certificants may be engaged in a variety of separate functions for which fiduciary duty is not germane to the "information, role or responsibility" of the CFP.

There are two solutions to this issue. First, our suggested refinements to the definition of the term "client" above would focus the scope of the Rules of Conduct on CFP certificants that form a financial planning engagement. The Rules of Conduct, then, would not inappropriately apply to CFP certificants providing separate financial functions distinct from the financial planning engagement. Second, we recommend that the definition of financial planning parallel to the greatest extent possible the term investment adviser as explained in the SEC's Rule 202(a)(11)-1 release and Investment Advisers Act Release No. 1092 (1987). Because some CFP certificants are subject to many layers of different standards under the Investment Advisers Act, the Securities Exchange Act of 1934, NASD Regulations, State Securities Regulations and State Insurance Regulations, it is extremely helpful to have consistent definitional terminology when functionally appropriate.

Disclosure and Contractual Obligations

The proposed revisions establish a number of disclosure obligations and standards for written agreements. While we comprehend the CFP board's general purpose in these revisions, our members find that the disclosure and written standards fit certain business models awkwardly. The initiative appears to be modeled on a financial planner operating as an independent registered investment adviser or as a sole proprietorship. In many cases, salespersons work within a corporate entity subject to preexisting standards and arrangements that subsume or substantially duplicate the purpose of the proposed revisions.

For example, if a CFP certificant is a registered representative of a broker-dealer, customer agreements are generated through the broker-dealer entity rather than between the registered representative and the customer. The same occurs when the CFP certificant is an investment advisory representative of a registered investment adviser. Likewise, disclosure is coordinated and supervised at the entity level rather than at the salesperson level. For example, Rule 204-3 under the Investment Advisers Act sets forth the written disclosure that investment advisers must delivered to customers 48 hours in advance of the advisory contract. The "brochure" required under Rule 204-3 contains information about fees, charges and conflicts of interest. When a CFP certificant is an investment advisory representative, therefore, the brochure delivered is originated by the registered investment adviser with whom the CFP certificant is associated.

Similar existing regulatory standards operate under SEC and NASD rules governing the relationship between broker-dealers and customers. Recordkeeping rules ensure proper implementation and recordation of these standards. Life insurers have significant documentation associated with insurance product sales that also defines legal obligations and the capacity in which the agent is operating. Similarly, life insurers have comprehensive records about these relationships and obligations.

Our members are concerned that the proposed modifications concerning disclosure, while well intended, may duplicate or conflict with preexisting standards governing broker-dealers and investment advisers. Moreover, the creation and delivery of multiple documents covering largely the same information may confuse or inundate customers. In solution, therefore, we recommend that the disclosure in Rules of Conduct 1 & 2 be drafted more generally so as to avoid conflict or redundancy. Also, the Rules should be revised to allow compliance with other existing regulatory standards, such as Rule 204-3, to fulfill the CFP Rules of Conduct.

We also recommend changing the requirement in Rule of Conduct 1.1 for written documentation of a specific nature regarding services provided by the CFP certificant. Because the individual may be operating within another entity such as an insurance agency, broker-dealer, or registered investment adviser that may have other means to communicate and record the relationship and obligations with customers, we recommend that the financial planning engagement be "memorialized" in an appropriate manner best suiting the individual relationship. This suggestion tracks the substance of the CFP Board's FAQ accompanying the Notice and Request for comment in item 10.

Substantial Reinterpretation of Investment Advisory Standards

After a significant period of development, the SEC adopted Rule 202(a)(11)-1 under the Investment Advisers Act which interpreted the scope of the broker-dealer exclusion from the definition of the term investment adviser. The SEC clarified the meaning and scope of activities that were solely incidental to brokerage activities, as well as those activities of a broker-dealer that required registrations as an investment adviser. As a result of this development, many broker-dealers, including some affiliated with life insurers, have implemented substantial regulatory and logistical changes to comply with Rule 202(a)(11)-1, which became effective in January 2006. Because of the comprehensive endeavors of these entities to comply with another regulatory structure, it is important to develop the CFP Board's Rules of Conduct carefully and deliberatively, with an eye to consistent interpretation of similar standards and parallel interpretive treatment.

Conclusion

The CFP Board's Exposure Draft achieves many constructive clarifications and enhancements to its Code and Rules of Conduct. The broad invitation and digest of comment on the proposal reflects a reasoned and careful approach to these important standards for CFP certificants. Many salespeople in the life insurance industry operate at different times and in different situations in the separate functions of insurance sales, broker-dealer activities, and financial planning engagements. The burdens of multiple layers of regulation can be daunting. The life insurance industry takes its responsibilities very seriously and commits substantial time and resources to comprehensive compliance systems and procedures. This approach not only fulfills regulatory responsibilities, but also serves the best interests of its customers and their needs.

Coordination of parallel and sometimes competing regulatory and professional standards is an important element of successful compliance. Our recommendations on the Exposure Draft add constructive input from the insurance industry to fulfill objectives of the CFP Board efficiently, as well as the multiple regulatory structures CFP certificants must satisfy.

We greatly appreciate your attention to our views. If any questions develop regarding our submission, please let us know. We would be happy to discuss the proposed revisions in greater detail, and would be eager to draft any items implementing our recommendations further. Many of our members have relationships with affiliated and independent broker-dealers that are members of the Securities Industry Association. We support the general position of the SIA, as orally explained to us, on theses issues.

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BILL MORAN, CFP®, ON BEHALF OF AMERIPRISE FINANCIAL SERVICES

Ameriprise Financial Services, Inc. ("Ameriprise Financial") appreciates the opportunity to provide comments in response to the revisions proposed by the Certified Financial Planner Board of Standards, Inc. ("CFP Board") to its Code of Ethics and Professional Responsibility ("Code" and Financial Planning Practice Standards ("Practice Standards").

At Ameriprise Financial, we take great pride in having more CFP® certificants than any other company in the country. Our financial planning process has been grounded in the CFP Board's Practice Standards for many years. Many of our advisors have worked hard to receive and maintain their CFP designation. We, therefore, applaud the CFP Board's efforts to add clarity to the Code and the Practice Standards and believe that many of the proposed revisions will benefit consumers, provide greater clarity for certificants, and assist the CFP Board in its ongoing efforts to enhance enforcement.

It is clear to us that the CFP Board has put forth great effort in crafting the proposal and has taken a valuable step toward significant and meaningful revisions to the Code and the Standards. We have certain comments and suggestions that we believe will enhance the proposed revisions and help ensure that ambiguities that exist in the proposal are addressed prior to the CFP Board's adoption of the proposed revisions. Specifically, we believe it is important to clarify those circumstances to which the default fiduciary standard of care outlined in Rule 1.1e. applies. In its current form, there is ambiguity regarding whether the default fiduciary standard is intended to apply to all engagements between a certificant and his or her clients or whether the intent is to limit that standard to financial planning engagements.

In light of the broad issue raised above and other issues that may be identified by other financial planning industry participants, we believe it is vitally important that consumers, the CFP Board, certificants and the financial planning community at large work together to address these issues before the CFP Board adopts its final revisions. To that end, we suggest that the CFP Board extend the period for Public Comment on the proposed revisions to at least December 31, 2006. Furthermore, we believe that the Board and all of the stakeholders in such a large undertaking will be best served by complete transparency within the comment process. Therefore, we request that, along with extending the comment period, the CFP Board make public all comments received during the Comment Period. Complete transparency will have the benefit of opening the dialog in the interest of capturing the cumulative experience and opinions of those who provide, those who receive, and those who oversee professional financial planning services.

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Ameriprise supports and commends the CFP Board for taking steps to adopt revisions to the Code and the Standards that will add clarity to the rules and standards that apply to financial planning relationships. We appreciate the opportunity to comment on the proposed revisions.

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VALERIE ANTONIOLI, CFP®

RE: Exposure Draft on Code of Ethics

This is a critical time for the financial planning profession and we really have only one chance to get it right. We increasingly hear about the baby boomer wave of upcoming retirements and the need for quality financial advice. The public is looking for-really desperate for, advisers whom they can trust to provide services and products that are in the clients' best interests, not the advisers.

I chose to obtain the CFP® designation because I felt this was the best way to communicate to the public my level of commitment to their well-being and my willingness to work in their best interest. This is one of the aspects that sets me apart from other practitioners.

I am confused by the CFP® Board of Standard's proposed changes. The financial planning process, the code of ethics and the associated standards promote the public good. The proposed changes do not. The changes appear to have been formulated without an appropriate transparent deliberation process. If my peers and I are confused, the public at large will be very confused if the changes are implemented--that will weaken their trust in the CFP® designation. As Certified Financial Planners® and as members of the Financial Planning Association, we have worked very hard over the years to promote the marks and increase the awareness of the value of the financial planning process. We have made some progress, but it is an ongoing effort. The proposed changes will really undo the work of the FPA and the CFP® Board

I appreciate the opportunity to be heard and I hope the Board will revise this draft.

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MARCUS ASHWORTH, CFP®

I disagree with Chairman Barnash.

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BALLIETT FINANCIAL SERVICES, INC.

The Board's efforts to advance professionalism and strengthen consumer protection through revisions to the CFP Board Code of Ethics and Professional Responsibility are commendable. However, there are aspects of the draft revisions, as discussed here, that actually seem to weaken professional standards and have the potential to increase, rather than reduce, client confusion.

The current definition of "fee-only", expressed in terms of compensation being received solely from the client and not being contingent upon the purchase or sale of any financial product, is quite adequate. On the other hand, the proposed revisions open the door to undisclosed compensation from related third parties by introducing the concept of a fee-only arrangement with an individual client, with all the resulting conflicts of interest. The revision confuses this issue further by stating that "A certificant who has both fee-only and non-fee-only client compensation agreements may not refer to him or herself as a fee-only certificant". Apparently, certificants could describe an arrangement with a client as fee-only if they simply refrain from referring to themselves as fee-only.

In the proposed revision, "fiduciary" is defined as "In good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and in a manner he or she reasonably believes to be in the best interests of the client." This definition appears to have been taken from the old "Prudent Man Rule" used as the standard applied to the investment function within a fiduciary relationship. As a standard of care for the overall fiduciary relationship, it is wholly inadequate.

To make matters worse, the proposed Code of Conduct enables a certificant to avoid being held to even this incomplete statement of fiduciary standards. Rule 1.0 allows an agreement between the certificant and the client to specify a "different" standard than the duty of care of a fiduciary. Rule 1.2, which sets requirements for the discussion held prior to entering into a written agreement, provides an option to not have the certificant held to a fiduciary standard at all.

Inexplicably, the same Rule 1.2 of the proposed revision requires the certificant to discuss terms for offering proprietary investment products, but does not require written disclosure of such terms. The rule also eliminates the provision requiring a certificant to inform clients of their right to ask for information about the certificant's compensation. If the new rules were implemented, clients would be deprived of an opportunity to consider terms of agreements outside the presence of the certificant.

The proposed revisions, in effect, establish two separate classes of CFP certificants, one that has no conflicts of interests to disclose and the other that does not have to fully disclose his or her conflicts. This is a terrible system to foist on a public that is known to be largely ignorant of the differences in sources and forms of compensation. It would be better if the CFP Board were to require all certificants to generally meet the same fiduciary standard but disclose any exceptions in writing. Then the client could give informed consent to the arrangement.

Gene Balliett
Dee Balliett
Richard Almeida, CFP®
Kathleen Stevens, CFP®
Balliett Financial Services, Inc.

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BRIAN E. BARTKUS, CFP®, CSA

Subject: Comments regarding practice standards change

The concern that pops into my head is using the term fiduciaries. Although I have always considered myself a fiduciary and acting as such; broker/dealer tell us we can not be a fiduciary. In fact, we are forbidden to do so. I am afraid that this wording will be me in between my broker /dealer and the CFP board.

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CHRISTOPHER W. BEALE, CFP®

I feet I must object to the Certified Financial Planning Board's proposed revisions to its Code of Ethics and professional responsibility. I have been a Certified Financial Planner practitioner since 1993. I thought my goals of becoming a CFP® were going to be aligned with the CFP® Board's. After reading the Board's proposed revisions, I'm wondering if this is true.

I feel the proposed revisions would weaken the standards to which all CFP®s currently must adhere. If a CFP® gives advice and practices financial planning to a member of the public as a client or prospective client, the CFP® should be held to a fiduciary standard. That fiduciary standard should be uniform in all circumstances. A Certified Financial Planner should not be allowed to determine whether he/she will be held to fiduciary standards with one client in one set of circumstances and then, based upon a change of language in an engagement agreement, decide that fiduciary standards do not apply with another client in another set of circumstances. An individual offering any investment advice corresponding to the six step process of financial planning should not be able to opt out of his fiduciary obligations.

If the CFP® Board does not define what a fiduciary is then it will be defined for us by the SEC, ERISA, or Congress. Congress attempted to define a fiduciary when they used the term "fiduciary advisor" in the recent Pension Protection Act.

If certain practice standards were not enforceable in a meaningful way, than those practice standards needed to be updated and strengthened; but, alas, this was not done. The lack of transparency in developing the proposed revisions reminds me of the Board's debacle when they attempted to develop the "CFP® lite", or Associate CFP®, several years ago. This appears as a blatant attempt to pander to the large wire houses and their representatives.

To paraphrase George Orwell in his book Animal Farm, all CFP®s are created equal, but some CFP®s are more equal than others.

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CHRIS BEARD, CFP®

Subject: Exposure Draft

My concern on going too far with "fiduciary duty" is that you cause compliance departments of Broker/Dealers to seriously rethink their involvement with the CFP Board of Standards, and the capability of overseeing what is clearly a higher set of rules by which to be governed.

This not only opens up CFP's as a whole for repercussions (not from the CFP Board, but from attorneys who get hold of documents that hold us to the utmost standards), but also opens up Broker/Dealer firms to the point that they will say "you can't use this designation because the risk of suit, based on the CFP Boards rules, is just too great."

I hope you will take this seriously. While fiduciary duty is very nice in theory, these are words that cannot be reversed in a court room and put you one step below a client's guardian.

Please don't go there!

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MARY M. BEAUCHAMP, CFP®

Subject: CFP Standards

I am greatly distressed by the proposed weakening of our fiduciary standards. Allowing a variable standard of care for CFP designees is simply not acceptable. As one who received the CFP designation in 1987 I have long helped locally in the struggle to build financial planning into a profession with high and consistent standards of care, with a clear-cut message to the consumer. Your recent proposals are a definite step backward in this process and many of us strongly disagree. Please reconsider. And please make this or any future changes an open and transparent process.

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PETER J. BECK, CFP®

Subject: CFP Proposed Standards

Having now read the CFP proposed revisions and the associated FAQ's, I feel I can now comment as a CFP practitioner :

No matter how the Board tries to "spin" the situation, the comments and standards clearly carve out exclusions for the CFP practitioner in various preferential settings (educator, broker, etc...) to avoid the duty to a client that an independent practitioner would have. As a result, the marks would be weakened to the level of standards applied to the lowest common denominator (i.e. whatever was least offensive to certain members) in the mind of the public.

As a result, with carved out standards and a least common denominator to the marks in the marketplace, I feel the value of these marks would be irrevocably diminished and, as a result, would feel the continued effort necessary to maintain the use of the marks would be less valuable.

I urge the Board to adopt Standards that apply equally to all holders. With regard to education, experience, and test achievement, there appears to be no differentiation among marks holders. So why does the Board feel it necessary to create exceptions to the duty to clients? If the intention of the Board is to broaden membership at the cost of the diminished value of the marks, I feel you are proceeding down the wrong path for the organization and cannot condone your adoption of such standards.

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MARK BEISSE

Subject: Comments on Change to Ethics Code

As described in the Wall Street Journal article today, page D2, the comments below are provided on yesterday's proposed change that would establish a stricter financial advisor ethics code within your rules.

I am a new retiree last year and have entered into an agreement for financial planning. I am in the process of receiving that advice. My "accumulation phase" was accomplished entirely on my own with no advisor except indirectly through written material. However, the issues for investing, insurance and taxation are substantially different in the "income phase" with little written information presently available for the average individual. When the opportunity to receive counseling from a person working on his CFP credentials arose, I decided to use that service. He has support of resources in a large company that specializes historically in insurance products.

To be honest, I am surprised reading the WSJ that the current standard does not require a CFP to assume a fiduciary obligation to clients. I am to pick up a copy of my agreement signed 10 days ago at a meeting with the CFP tomorrow, and it may be more clear there. However, when one sees the acronym CFP, the expectation intuitively is fairly high since this is the credential all the experts say you should ensure is held by your advisor. If the fiduciary responsibilities are not presently written into the agreement I have, that would likely be sought by me in the future. I trust the person because he has assisted with my annuity already. However, trust is not enough in this relationship.

Therefore, my specific comment is I endorse the strict standard and assume if you do not promulgate it that the Federal Government may. The question is whether the professional organization takes responsibility for a rule rather than if there will be a fiduciary duty of a CFP for the client. We cannot afford another crisis as happen with savings and loans, WorldCom, and mutual funds where individual investors are left with little or nothing. I have plenty of time to lobby for the new requirement as was eventually imposed within law in the above crises. But in keeping with what has now become the expected transparency and accountability, the Board should just do the right thing.

Thank you for the opportunity to comment.

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MARY M. BELL

Subject: Proposed Changes to the Code of Ethics

I want to clearly state my strong disapproval of the proposed changes to the Code of Ethics especially the proposed opt-out fiduciary standard. These changes will decrease public trust and compromises the integrity of the CFP® designation, which cannot be remedied by additional disclosure. If adopted, I will no longer be able recommend that the CFP® designation implies a fiduciary obligation with the public. Because of the proposed opt-out standard, the integrity of the CFP® designation and our profession as a whole is at stake.

As a graduate student at Texas Tech in the Personal Financial Planning program, I used the following as my philosophy statement for my capstone project: "I adhere to the highest ethical standards as outlined by the CFP Board of Standards. Our ethical standards will not be compromised". With the proposed opt-out fiduciary standard, the CFP Board has veered far from this commitment that the public expects from a CFP® certificant.

In making this change to the Code of Ethics, the CFP Board has actually taken a step back as far as benefiting the public interest. The mission statement of the CFP® organization is "to help people benefit from competent, professional and ethical financial planning." By removing the fiduciary standard, the CFP Board actually detracts from the profession and adds to the public confusion about our services. Before this new element was added, a client was able to trust that a financial planner who held the CFP® designation was acting in the client's best interest. If the new change is enacted, clients will not maintain this trust.

Finally, the argument that the public will understand this opt-out fiduciary standard through proper disclosure is a moot point. We currently have so much disclosure that the public does not understand nor benefit from. Instead the continued disclosure claims only add to the confusion and frustration that the public experiences with the financial services industry as whole. Very rarely is disclosure written in a short and concise way that allows the client to truly understand and agree to what they are signing.

The CFP Board cannot please everyone and must stand for something. I hope that when evaluating whether to accept these proposed changes or not, you chose to protect the public not just "benefit" from them.

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WILLIAM P. BENGEN, CFP®

I hold CFP license #035078 and have been a practicing financial advisor since 1989. I operate on a fee-only basis and consider myself a fiduciary.

In general, I am quite disappointed in the proposed changes to the code, particularly with respect to the definition of a fiduciary. I believe that the profession will benefit only if a strict, comprehensive standard of fiduciary standard is developed which will apply to all CFP members who are actively engaged in financial planning in any form, with no exceptions. If defined otherwise, the term "fiduciary" will lose all value and applicability in the profession, and the financial consumer will be terribly confused.

I also question the wholesale overhaul of the language and structure of the Practice Standards. This efforts seem totally unnecessary and unproductive. As the old saw goes, "if it ain't broke, don't fix it".

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A. RAYMOND BENTON, JR., EA, CFP®

RE: Code of Ethics Exposure Draft

I am responding to the exposure draft in appreciation for work the CFP Board has done in its attempt to simplify and rationalize the Code of Ethics, and I recognize the difficult issues faced by the board in executing this endeavor. I assign the highest importance to this task, and I am cognizant of its implications for the future of our profession.

I have held the CFP® designation since July 13, 1998, and have been a financial planner since 1982. I was Eenrolled to Represent the Taxpayer Before the Internal Revenue Service in 1984. I have served as President and Chairman of the Board of the FPA of Colorado, and was Chair of the Practice Standards Task Force of the ICFP. I also served on the Practice Standards Work Group of the FPA and have served as a volunteer for the Board of Professional Review. I am a registered representative with Lincoln Financial Advisors (LFA), and provide fee-based comprehensive financial planning services. LFA encourages and helps its representatives to obtain the CFP® designation.

Simplification and Re-organization of the Code.

"Client" denotes a person, persons, or entity who engages a certificant and for whom professional services are rendered for compensation. Where the services of the certificant are provided to an entity (corporation, trust, partnership, estate, etc.), the client is the entity acting through its legally authorized representative.

I welcome the Board's efforts to simplify and re-organize the code of ethics. In particular, I applaud the proposed change in the definitions of "client" and replacing the Practice Standards with more general Rules of Conduct. The old definition of client was misguided in concept, ignored common usage, and distorted reality in the apparent attempt to extend the bounds of regulation. In fact, I am so pleased with this change that I am hesitant to be critical of other changes. Bravo!

General rules of conduct, which are intended to extend to all certificant activities, are preferable to practice standards, which although they may have described what were intended to be best practices, were far too specific in content while at the same time their application was far too extensive when combined with an expansionary definition of client.

In general, the re-organization and simplification of the code is productive and beneficial.

Definition of "Engagement":

A "financial planning engagement" exists when a client signs a binding written agreement under which a certificant performs some type of financial planning service.

A formal, written agreement, while it may represent best practice, is too restrictive and forbids informal relationships within which financial services are provided without the presence or necessity of a written contract. For example, at Lincoln Financial Advisors, a written contract is required whenever a fee is collected, but not otherwise. And planners who are registered representatives often provide services which do not require-and should not require-comprehensive planning agreements. For example, a client may be referred for a specified life insurance or investment product and may not be interested in a more expansive relationship. It seems that in this case, common usage is forgotten in order to provide for the modified (or modifiable) application of an anticipated fiduciary standard in the code.

More importantly, the requirement of a written contract is too restrictive in terms of the Board's mandate to protect the public. It appears that for existing clients, the application of the Code itself can be avoided by simply not being party to a written contract. I am reminded of a recent case with regard to which I am serving in an expert witness capacity. In this particular case, the client regarded themselves to be in a financial planning relationship (having worked with the planner in question for more than 20 years) and relied on the advice of the certificant on that basis. The defense (and the certificant's broker/dealer) is arguing that the client was not a "financial planning client." So, in some cases at least, it seems clear that the nature and content of the relationship must define the presence of an engagement and that agreements should not be limited to written contracts. On the other hand, requiring written contracts under the Rules of Conduct is an unnecessarily burdensome requirement made necessary only by a bad choice of words, viz., "fiduciary."

Fiduciary.

The use of the term "fiduciary" in the Code (specifically in the Rules of Conduct) is simply a bad choice of words, foisted upon the Board by fee-only fanatics, who self-servingly see it as a method of marketing their services.

The liability of fiduciary responsibility is often assigned by the courts to cases where one party holds a superior position to the other in terms of education, training and knowledge, and this is often used as justification for requiring the fiduciary label. However, the assignment of this increased liability should be left to the courts. They will likely get around to it soon enough. The term does not belong in the Code.

On the other hand, requiring as a part of the Code of Ethics that the certificant always act "In good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and in manner he or she reasonably believes to be in the best interests of the client" would be perfectly acceptable. This would avoid all the controversy regarding the "check the box" fiduciary application within a required written contract. As an aspirational part of the code-combining the old rules 201 and 202 into the new 6.3-the latter would make perfect sense. Let others apply-or misapply-the term "fiduciary." Methods of compensation do not define or hinder the financial planning process. Accepting the self-proclaimed mantle of "fiduciary" is not required in order to achieve recognition as a profession or to distinguish the CFP® practitioner, but the term itself may create multiple problems for those of us who work for broker/dealers. By living according to the rules as described we will earn the respect we seek and, ultimately, the courts will likely decide to hold us accountable.

On the other hand, if the term "fiduciary" is retained, then the implementation of recommendations should be excluded from the "financial planning process," and the term "fiduciary" should apply only to the latter.

Finally, while I applaud the broad areas of the draft where the board has been successful in updating and simplifying the Code, the substantive issues raised go the heart of defining the financial planning process itself and require greater attention than a cursory review. For that reason, I strongly recommend that the Board NOT move forward on the more controversial portions of the current draft. While the balance of the draft is acceptable, I urge that these more controversial sections be returned to the committee for additional discussion, in the spirit of full disclosure and openness, and including consideration of the comments thus far received, as well as additional conferences with the appropriate FPA work group.

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NICK BHANDARI, CFP®

I have been made aware of the recent proposed changes to the CFP Code of Ethics proposed by the CFP Board. Some of the proposed changes, especially the ones around allowing 'subjective' approval by the CFP Board in determining the validity and actions of someone holding themselves out as a "financial planning practitioner", are very concerning to me. I have assumed all of the years that I have been a CFP Certificant (#59998) that the same rigid requirements of the highest ethical actions would be something there would be no compromising of for anyone holding the marks 'CFP®'.

I am sure that I don't have the whole picture of the proposed changes by the CFP Board. I am simply writing this to give you my thoughts that any relaxation or compromising of the integrity of the CFP licensees through optional or subjective standards would dilute the 'gold' standard in the designation you have worked hard to create.

Please contact me at the number or this email address for any feedback.

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DAVID (TREY) BIZÉ, CFP®, RFC

Subject: Exposure Draft Comment

Our local FPA meeting pointed out that the Exposure Draft allows CFP certificants to opt-out of fiduciary standards, i.e., provide a lower their standard of care, for clients simply by having a written agreement. (3.8.b)

3.8 Not take custody of a client's property without entering into a binding written agreement to treat that property with the care of a fiduciary unless

  1. the client is a corporate entity, and/or
  2. a binding, written arms-length agreement between the parties specifies a different legal standard applicable to custody of the client's assets

This hole is big enough for the large broker-dealers to drive a truck through with every last one of their brokers on board. This disclaimer would be merely a sentence or two in the multiple page contract that a client signs.

The CFP mark means a lot to the public especially savvy investors. This change which appears very minor is in fact HUGE and would severely jeopardize the prestige of the CFP mark. Every CFP should be held to the standard of a fiduciary if appropriate and the broker who holds the CFP mark should not be allowed to trick the client into anything less than for what the CFP mark stands.

I understand that the CFP Board is a business endeavor and does not want to lose the brokers who hold the designation. However, everyone who claims to be a CFP needs to comply with the CFP standards which have to remain beyond reproach.

The broker-dealer rule is eventually going to erode the public's confidence in the financial services industry. It would be really nice if the CFP designation remained untainted so that investors recognize the last bastion of "best for the client" and will know to seek out a CFP for financial advice and counsel.

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LYMAN K. BLACK, CFP®

Subject: Proposed revisions to Code of Ethics & Practice Standards

I have recently reviewed a brief synopsis of the proposed changes, and in my opinion they are outrageous. How could you think about diminishing the protection to the public? You are taking a big step towards NOT deserving to be THE public agency over-viewing the field of Financial Planning.

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JASON C. BLACKFORD, CFP®

In reviewing the proposed standards for liability of Certified Financial Planners (CFP), one must carefully examine what the state law is with regard to the liability of stockbrokers and persons who present themselves as agents. It is hornbook law that an agent has a fiduciary duty to the principal.

I am enclosing a recent decision that outlines the degree to which there is a fiduciary duty between a stockbroker and a client in Ohio. There are Ohio cases that tend to go beyond this recent opinion, but I am enclosing this decision because of its recent issuance. Your standards should not permit the parties to reduce the standard of care in those jurisdictions and circumstances in which there is a fiduciary duty imposed upon the broker or CFP. I believe the ability of the parties to reduce that standard of care can lead to an additional abuse. Usually, no attorney gives advice to the client with regard to contracts with a CFP or a stockbroker. To permit the reduction in the standard of care required of a CFP by contract opens a wide door to reducing the protection of the client.

Burns v Prudential Securities, Inc.

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DEAN L. BOEBINGER, CFP®

Subject: Proposed Ethics Changes Response

I'm opposed to any "loophole" that would excuse any CFP from fiduciary duty in any client relationship. However, the limit of the scope of services can and should be stated in a written agreement with the client so that the client has a full understanding of what the (fiduciary) duties of advisor entail. This will avoid placing the advisor in a position as necessarily being the fiduciary in every aspect of the client's financial affairs.

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JEFFREY N. BOGUE, CFP®

Subject: Comments on Proposed Changes

I am strongly against the proposed changes that would allow CFP practitioners to opt out of working in a fiduciary capacity via written disclosure. Rather than allowing more loopholes for the disingenuous financial planner to take advantage of, take a stand. Acting in the best interest of the client first isn't such an arduous regulatory burden, it should be deserved by the consumer. The changes would essentially make an RIA classification hold a higher standard than a CFP practitioner. Is this what you really want to create?

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PHIL BOUR, CFP®

Subject: Proposed changes to standards and ethics requirements

I agree with the FPA and NAPFA organizations that the lack of consistent use of fiduciary status for all CFP® certificants, as currently proposed, is not in the best interests of the financial planning profession. Please reconsider and rewrite the codes to require all CFP® professionals to be held, always, to a fiduciary standard.

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MICHAEL A. BRANHAM, CFP®

Subject: Comments on Proposed Revisions

I would like to comment on the proposed changes to the Financial Planning Practice Standards and the Code of Ethics and Professional Responsibility. Prior to making my comments, however, I would simply like to thank you for your work to open the dialogue about the future of the financial planning profession, and more specifically the CFP® mark.

My hopes as a planner committed to the future of my profession are:

That we will begin a race to the top in the debate on ethical and moral responsibility.
 
That we will set standards based on what is good, right, and proper for the clients we serve.
 
That the standards we adopt are clear, concise, and easy for the uninitiated to comprehend, allowing for differentiation between those who subscribe and those who do not
 
That once we have found the high ground for our standards and ethical responsibilities, we will invite professionals to adopt those standards.
 
That those professionals who answer the call willingly and honestly embrace and uphold these ideals.

Up to this point in my commentary, I would hope/assume that we are all in agreement. Unfortunately, I feel your proposed revisions fall short of providing for these. That your proposals create grey areas is certain. To allow for opt-out provisions of a fiduciary duty, to require a 'financial planning engagement' to solely be defined in a written document, and to muddy the waters concerning the definition of "fee-only" financial planning is suspect. These revisions give the impression that revenue, not the "race to the top" mentality, is driving the CFP Board to act. One could readily surmise that your new standards are being set to meet the needs of a segment of your constituency, and your budgetary requirements, rather than with the good of the public in mind. If true, this is an unfortunate time for financial planning as a profession.

We are facing some important questions as financial planners. One question of great importance is: how does one differentiate a 'good' planner from the rest of the field? My definition of good has little to do with compensation model or employer, but with a planner's willingness to subscribe to those high-minded ideals to which I alluded earlier. It was my understanding that the CFP® mark would embody all that is good in financial planning, and allow consumers a way to differentiate planners who had chosen competence and integrity as their chosen standards. My hope is that we do not diminish or set back all the work you have done to date in order to make changes that simply create more confusion.

Please reconsider your proposals with the race to the top in mind. Any revisions to Financial Planning Practice Standards and the Code of Ethics and Professional Responsibility ought to be high minded and concise, without leaving "loopholes" to be exploited by those who wish to use the mark without living by the principles it embodies.

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DOUG BRAY, CFP®

Subject: RE: Other

Card carrying member. #93559, although, while I'm at it, I'm not at all a happy member because you guys are allowing the independents to drive your agenda and make the compliance environment so silly that we have to now get 4 disclosures signed by a prospect for doing a freef inancial plan.

You have consituents other than the holier-than thou independents. Don't cater to one subset.

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BRIAN H. BREUEL, CLU, ChFC, CFP®

Subject: Rule Changes

I agree with FPA and oppose the weakening of the rules. After the disintegration of standards of ethical conduct in corporate America in general and the financial services industry in particular, someone has to have the courage to stand up and challenge the trend. I would hope FPA/CFP organizations would lead the charge not cave in to mediocrity.

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C.E. SCOTT BREWSTER, CFP®, MBA, EA

RE: Exposure Draft Revision of Ethical Standards

Thank you for taking the time and effort to update the Code and Financial Planning Practice Standards. While I am grateful for the CFP Board of Standards leadership in the financial planning profession, I have a concern about your changes.

My main concern is that we should keep Practice Standards Rule 202, which states that the practitioner must act in the client's interest. In absence of Rule 202, nothing would require a financial planner to act in the client's interest, especially if the proposed section allowing CFP Licensees to opt out of fiduciary status remains as is. In fact, I would raise the standard to "the client's best interest," since this would help advance the credibility of the designation and the financial planning profession.

As the gold standard for financial planning, we must hold ourselves to the highest standard of consumer advocacy, or we will risk loosing that label and set back the profession.

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JACK BRKICH, III, CFP®

Subject: Changes to Code of Ethics

Undertaking revisions to the policies, procedures and processes of the CFP registration is a profound and weighty undertaking that I know the board debates with create care and scrutiny. As you ponder changes to the Code of Ethics, I wanted to send my input as a registrant that will benefit from your proposed changes. By and large, I think the intent to improve the current standards is evident, however I do have some concerns:

There appears to be an inconsistency with better serving the public in regards to transparency in this process, in my opinion. When the SEC, NASD, CA Dept. of Corporations open the debate on regulatory or procedural changes, all the comments are posted in the open for any interested party to read said comments and make themselves aware of the entire debate. From what I have gathered thus far, it appears that you have decided that comments from the public will not be posted for review. How can secrecy create more confidence in the CFP registrant and its' governing board? I emphatically request that you reconsider possibility and that you make all comments received fully available to the public.

There appears to be a conflict with long standing SEC requirements in this process, in my opinion. I believe the SEC has clearly mandated that anyone holding themselves out as a financial planner must be registered under the Investment Adviser Act of 1940, as part of the federal statute. I also believe this imposes a fiduciary duty upon the financial planner. Your proposal would allow a registrant to specify a lower standard in writing in the client engagement. How can allowing a registrant to arbitrarily lower the professional standard of advice the planner will be held accountable to create more confidence in the CFP registrant and its' governing board? I emphatically request that you completely remove such a possibility from consideration.

Thank you for your consideration of my concerns.

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CALEB BROWN, CFP®

Subject: Comments on proposed CFP Code of Ethics and Professional Responsibility

I have read the proposed changes to the CFP Board's Practice Standards and I am thoroughly disappointed. Allowing a lower fiduciary standard just because it is in writing is not acceptable. This weakens the CFP mark and the financial planning industry as a whole, not to mention confuses the consumer even more. We are at a crucial point in the industry as we work to become recognized as a true profession and this proposal moves us in the wrong direction. All people holding themselves out as financial planners should be held to the same standard which is to register under Investment Advisor Act of 1940.

We must raise the bar and show unity- our clients and consumers demand it!

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NEIL A. BROWN, CPA, CFP®

Subject: Revised Code Of Ethics

As a fee-only practitioner and program coordinator, I attempt to apply in my practice and instill in my professional students a fiduciary duty in the approach to our profession and to our clients. However, the SEC has erred in the broker-dealer, i.e. Merrill Lynch, exception via the allowance of contractual language and adjustments and now so has the CFP Board. I have heard Sarah Teslik speak at several conferences, NAPFA and Program Directors in CA, and was expecting some backbone from the CFP Board on this. However, I am very disappointed in our (shamefully stating our b/c I would prefer no affiliation with such right now) Board and how they apply ideas to our profession. Imagine, a medical board stating it would be ok to not adhere to the Hippocratic oath by simply disclosing to the patient on page 19 of the insurance filing papers. That is what the CFP Board is allowing.

Instead of this loophole, our ethics as well as our CE is a joke. I get over 80 hours per year yet I see most practitioners struggling to get the minute 15 that is required. How can we keep up with the numerous topics in our field with only 15 hours and these can be done by simply flipping the pages of a magazine and reading the correct paragraph? We are required to get 2 hours of ethics every two years. Again a joke because it can be done by simply putting your phone on mute and pretending to listen to some ridiculous conference call on such.

The CFP Board and the mark are becoming a joke as well. The Board is more concerned with the $595 fee for the exam, the money generated via the requirements to sit for the exam and ever popular trademark paralegals and attorneys that spend way too much time policing the use of the mark vs. actually worrying about well respected and educated professionals. Our field is too full of those who give us a bad name. Get a life and actually make our profession better and more respected vs. sitting in your ivory towers of academia and inside the beltway mentality that exists on the Board (you work in Denver not DC anymore).. Actually, hire a president and a group of Board members who care and practice under the mark the right way - fee only and with a fiduciary standard

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ERIC BRUCK, CFP®

Subject: Comments re. Exposure Draft

These are necessarily brief comments centering on two primary areas of concern exposed by the current DRAFT REVISION OF ETHICAL STANDARDS released by the Board.

  1. The proposed standards create multiple standards of acceptable behavior by a CFP(r) Certificant, permitting written agreement from a client authorizing the Certificant to act in a less than fiduciary manner. This provision demeans and diminishes the CFP(r) mark and permits a weaker standard for Certificant professional behavior, thus leaving the public LESS protection from unscrupulous behavior than they currently enjoy.
  2. The proposed standards create massive confusion and do nothing to clarify for the public a) which CFP Certificants actually do comprehensive financial plans without reverting to a non-fiduciary role in selling product; and b) which ones do any kind of modular planning IN ORDER to sell product - taking off their fiduciary hat at the completion of a potentially self-serving planning engagement to assume their product placement role.

These proposed standards would set us back as a fledgling profession to a stage we may never recover from. Multiple standards will be revealed to be multiple excuses when the complaints from the public come rolling in. The CFP Board needs to stand up for what is right and simply define every CFP Certificant as a fiduciary. We must each be required to sign a pledge to that effect in order to hold the mark.

That pledge may be as simple as stating "I pledge to conduct myself in every client engagement in such a manner and with such intention that I will demonstrably always place the client's interests first in the advice I render and with the products and solutions I recommend."

Please, let's "scrap" this version and start anew. Please think like a fiduciary yourselves in order to do right by the public you are sworn to protect and the profession you are pledged to advance.

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STEPHEN L. BRUNEAU, CFP®

Subject: CFP revisions

I want to go on record as supporting Chair Barnash's position 100%.

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RANDY BRUNSON, CFP®

Subject: New Code of Ethics

Thank you for the work you have done to date on the new Code of Ethics for CFP's.

It is our personal and professional opinion and belief that anyone who holds him or herself out as a financial planner, financial advisor, financial consultant, or any other term that implies an advisory role, is a fiduciary. Period and paragraph. If we intend to create a meaningful professional organization, including a set of standards, built around the CFP mark, it is crucial that all CFP's embrace their role as a fiduciary, with no exceptions.

We will continue to encourage our professional staff who aren't already certificants to pursue the CFP education. At the same time, we are thankful that we don't need to rely on the marks to attract business. We have chosen to embrace our fiduciary status, with all its incumbent responsibility, and we make this a part and parcel of both our practice standards, and our marketing. We would encourage you to do the same.

Once the board is prepared to embrace the fiduciary responsibilities that go along with the CFP marks, we will more readily embrace the idea of promoting our designations as part of our message to our public. Until that time, we are grateful for the education, and will distinguish ourselves from all those who would attempt to hide behind the marks without the due care that comes with being a fiduciary.

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CATHY BUCHANAN, CFP®, AAMS®, CRPC®

Subject: Proposed revisions to CFP Board 's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards

As a fairly new certificant, I am concerned about certain of the proposed revisions.

My particular concerns are:

  1. The elimination of the practice standard requirement.As a comprehensive financial planner and CFP certificant, I believe that a "discussion" of the practice standards requirements is simply inadequate.
  2. The creation of a new fiduciary standard, but allowing a lower standard if set forth in the client agreement. I believe this is a sop to the brokers who are CFP certificants and allows them to avoid the default fiduciary standard. This seems inconsistent with the CFP Board stated position to the SEC on the Broker-Dealer Rule.
  3. The assertion that any shortfalls in the proposed revisions will be address by a "Best Practices" guidelines document. We are asked to agree with an outline and to expect that the rules will come later. This can best be compared to tax revisions which are passed in general form by Congress and which are then written, defined and ruled upon by the IRS, which are then re-revised by Congress, and so on. That process has worked poorly for many years.

The public expects CFP certificants to adhere to certain standards. The proposed revisions appear to dilute those standards.

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DEAN K. "ROCKY" BUFORD, CFP®

Subject: RE: Correction: Chapter Leaders, Voice Your Opinion on Proposed CFP Board Code of Ethics Changes

As a CFP since 1992 and currently a board member of our local FPA chapter in Kansas City, I personally believe that the ethical standards in which we do business by should be strengthened not weakened. I personally believe for the CFP designation to be looked at in the same way as CPA or J.D. we need to constantly adhere to high ethical standards. Anything that the CFP Board can do enhance the image of the CFP is appreciated.

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MIKE BURDICK, MBA, CFP®

Subject: Proposed CFP Board Code of Ethics Changes

My input for the proposed change to the code of ethics is simple

If you use the CFP mark you should be held to a fiduciary standard. If you want to pass all the requirements to use the CFP mark, but pursue a non-fiduciary career then you can not present yourself as a CFP practitioner, certificant, etc. or use the mark.

This would allow FPA to have fiduciary and non-fiduciary members, but would avoid public confusion about what the CFP mark stands for.

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JOHN J. BURNS, III, CFP®, MS, MBA

THE FOLLOWING ARE MY COMMENTS ON THE JULY. 24, 2006 NOTICE AND REQUEST FOR COMMENT.

MUCH OF THE CHANGES ARE FOSTERED BY FEE ONLY AND FPATYPES IN AN ATTEMPT TO ELIMINATE COMPETITION.

  1. WHEN THE CFP AND FPA WERE CONSIDERING JOINING FORCES I ATTENDED A JOINT CONFERENCE AND I FOUND MOST OF THE FPA FOLKS TO BE WEAK FOLKS LIKE THE WORST OF GOVERNMENT DO NOTHING BUREAUCRATS, LAZY SCHOOL TEACHERS AND WITHOUT A CLUE BANKERS. SEVERAL COULD NOT PASS THE CFP EXAM AND MOST WERE WEAK. BACK THEN I WROTE Y'ALL AND RECOMMENDED THAT WE NOT COMBINE WITH THE FPA.
  2. WHILE MANY FEE BASED CFPs ARE GREAT TOO MANY ARE WEAK.
  3. 1 WISH ALL MY CLIENTS WERE FEE BASED (I WOULD MAKE A LOT MORE MONEY FOR LESS WORK.) BUT IN MOST CASES IT IS IN THE CLIENT'S BEST INTEREST TO NOT BE FEE BASED.
  4. MANY FEE BASED CFPs STATE THEIR FEES AND THUS ARE TOO EXPENSIVE FOR MANY FOLKS. WE PLAN FOR EVEN THE FOLKS WHO ARE IN FINANCIAL TROUBLE. WE OFTEN PLAN WITHOUT GETTING ONE CENT - IT IS HARD TO TELL A WIDOW THAT SHE NEEDS TO GET A JOB AT 75 YEARS OF AGE, BUT HELPING AND PLANNING FOR THEM IS REWARDING WHEN YOU SEE THEM SURVIVE ECONOMICALLY. ONE OF THE GOOD THINGS ABOUT THIS "NO FEE WORK" IS THAT SOMETIMES "WHAT GOES AROUND COMES AROUND" IN GOOD REFERRALS.
  5. MOST OF THE WEAK FEE BASED CFPs USE "CANNED" FINANCIAL MODELS/PLANS THAT AS WEAK (AND MAYBE LAZY) PLANNERS RESULT IN WEAK OR BAD PLANNING AND PLANS. THESE FOLKS ARE HOPING YOU CAN HELP ELIMINATE THEIR COMPETITION!

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SHARI BURNUM, CFP®

Subject: Fiduciary Duty

In the latest revisions to the ethics code, I hope the board will consider leaving the language regarding fiduciaries 'as is'. Although the Board's assessment of the document changes will not lower any standards, I cannot see how this is the case if a professional were able to declare ANY OTHER THING other than having the client's best interest at heart versus simply being held to a standard based on the professional competency of:

  • A professional person standard - doing what a person of similar skills and training in a similar locale would do under similar circumstances.
  • A standard defining what an investor, investment professional, tax professional, attorney or other type of person would do under similar circumstances.
  • A standard defining specific tasks that will be accomplished and whether the implementation of those tasks will be to a particular standard.

If a client hires a CFP, they should want THE BEST. I think by allowing a client to choose any of the above bullet points in a CFP is indeed lowering our standard.

I've never written anything to the CFP Board and have no real reason to think my lone voice has an impact. But please pass this along as a cry from the field that perhaps we may be indeed compromising our character.

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ROBERT BUTERA, CFP®

Subject: Proposed Ethics Changes

I am deeply concerned with an apparent loophole in the proposed ethics revisions that would allow a financial planner to act with less than a fiduciary standard in client relationships. It has always been my understanding that holding myself out to the public as a financial planner requires that I be registered under the Investment Adviser Act of 1940, and therefor imposes a fiduciary duty. Allowing financial planning practitioners a means to act in a lesser capacity would ultimately reduce the value of the CFP mark, and inject even more confusion about our professional standards which will ultimately hurt the people we to serve, our clients.

Please consider eliminating this loophole, and require that CFP Certificants adhere to a fiduciary standard when providing financial planning services.

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CHRIS BUTLER, CFP®

Subject: Response to proposed changes to Ethics

I am writing to let you know that I am opposed to the proposed changes to the Ethics standards. One of the reasons I chose to obtain the CFP certification was because of the high standard of ethics and requirements of the CFP Board. I work in the trust industry and am very familiar with the fiduciary standard. In our day and age of scandal and corruption in the financial services industry, I feel that the current Ethics standards set a high bar of moral character and professional conduct, and hold CFP professionals to doing what is best for the client. The proposed changes, in my opinion, lower this bar and open the door for the very behaviour the standards were meant to reduce or eliminate. I hope the CFP Board continues to give careful consideration to the matter before implementing these changes, if at all.

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ROBERT CALLAHAN, CFP®, CPA/PFS

Subject: CFP Ethics Changes

I agree with the comments made by Chairman Barnash in the FPA email sent out 8/22/06. The new rules are making it too easy to opt out of the fiduciary responsibility. Also, Investment Advisors are being able to represent their products without adhering to the current requirements of a CFP. It is all about the clients' best interest and the new rules sound like large firms lobbying the rule makers to get out of doing the job correctly!

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BRIAN R. CARLTON, CFP®

Subject: Concerning proposed Code of Ethics

I have been a CFP certificant since 1995 and have held that credential with pride in believing that it is tops in the financial planning field. Having read over your proposal I am very concerned about the direction you are taking in regards to being a "fiduciary" and the ability to opt out of such status. If you go forward with this I am afraid for the future of the CFP mark!

I know you have spent countless hours over this matter and I appreciate your work. However, let's get this straight. The definition you used for fiduciary was extremely weak and the very idea that a certificant would not act as a fiduciary all the time no matter who he is dealing with brings me close to anger. How can one waive the idea of acting in the client's best interest? Who would want to engage a professional who would not act in their best interest??

Yes, we are talking "Professional" here. That's what I think of when I think of the hard work I put out to become a CFP certificant. If we are to be known as professionals, then let's act like one-We hold the interests of the client above all other interests. All the time.

Please reconsider your direction. No waivers at the signing of the agreement. We want to be known as fiduciaries and professionals as we use the CFP mark. Thank you.

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TIMOTHY W. CARNEY, CFP®

Subject: Code of Ethics Changes

I support FPA's position on these revisions as disclosed in an email I received from them today.

Please vote against these proposed changes.

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GORDON CARPENTER, CFP®

Subject: response to Exposure Draft

I became a CFP because I thought and hoped it stood for a standard of excellence in a profession. I differentiate myself from other planners, advisors and brokers with the CFP Mark and all that it stands for. Anything less than the highest standard of excellence is simply unacceptable. Do not allow different standards and do not allow some CFP's to be held less accountable than others. This is not true in the accounting profession (CPA's); it is not true in medical profession and it is not true in the legal profession. There is no reason for the CFP Board to exist if its mission is not to main a standard of excellence.

I am sure there is pressure to satisfy many different practitioners and industry influences. Do the job you were asked to do, build this profession to the excellence it deserves. Don't sell out to special interests and their weakness.

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DAVID M. CARR, CFP®, CPA/PFS

Subject: Comments regarding proposed Code of Ethics

Thank you very much for the opportunity to express my views as a CFP® practitioner regarding the proposed Code of Ethics as promulgated by the Certified Financial Planner Board Of Standards, Inc. (CFP Board).

I realize that the CFP Board needs to have its code of ethics reflect both the high standards of the profession and work within the realities of the marketplace.

However, I feel the proposed Code of Ethics misses an opportunity to require a fiduciary standard for CFP® practitioners when financial planning services are being provided. In my opinion, a fiduciary standard is often not applied in the marketplace for financial planning services, but should be. If financial planning is going to be considered a true profession, the fiduciary standard of having the client's interest come first will need to become part of the Code of Ethics.

In my opinion, a less than fiduciary standard inherently violates the principles of Integrity, Objectivity, Fairness, and Professionalism for which the CFP Board strives.

Can you imagine going to a doctor who did not put the patient's interest first? Can you imagine a doctor being allowed to present an agreement to a patient that would allow a different standard of care that did not put the patient's interest first? Can you imagine a patient being on an equal footing with the doctor in negotiating such an agreement?

I can not imagine any of these and I can not imagine that financial planning will be considered a true profession without an appropriate fiduciary standard that applies to all financial planning services.

The CFP® mark has come a long way to becoming the professional designation for financial planners. The CFP® mark, should, in my opinion, exist not to perpetuate the practice of financial planning that has allowed for less than a fiduciary standard, but rather should elevate the ethical standards to a level that is appropriate for the profession and for serving the public.

If the CFP Board wants to lead the profession, it must do so with the highest standards.

Standards are standards. They are not negotiable with clients. You must have the courage to set those standards.

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TODD C. CHAMBERLAIN, CFP®, CPA/PFS

Subject: Ethics Changes Feedback

I have recently reviewed your proposed ethics changes. There is one change that I have a significant issue with - the change to Rule 202. Clients / customers will not understand the specifics of an agreement as to whether there exists "Full" Fiduciary responsibility or some "Lite" Fiduciary responsibility. The net effect will be that all agreements will include this "Lite" definition and the overall professional will be harmed. If we are fiduciaries - then be fiduciaries. If you are going to act in a client's best interest - then ALWAYS act in a client's best interest. If someone doesn't want to act in a client's best interest ** or worse ** only wants to act in a client's best interest SOMETIMES- then that person shouldn't be a CFP.

If the CFP is to be the mark of a financial planning professional it must stand for something. The code of ethics goes hand in hand with the financial knowledge.

Subject: Proposed Ethics Changes

I am very much opposed to the ethics changes that have recently been proposed. Overall, I feel that this would significantly weaken the financial planning profession by creating confusion with clients as to when a fiduciary standard applies, and when it doesn't. Allowing a reduced standard is sneaky way to provide a back door allowing CFP's to specifically NOT act in a client's best interest.

Overall, I feel this would hurt the CFP designation.

Thank you for your time in reviewing my comments.

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CHARLES CLINES, CFP®

Subject: Comments regarding Revisions to the Code of Ethics and Rules of Conduct

As a general matter, I whole heartedly agree with the tenor and content of the proposed changes. There are two specific areas that I would like to see clarified regarding the scope and applicability of these rules. My comments relate to the scope of Rule 1.1 and more specifically the breadth of the requirement for a "binding written agreement" and default level of care of that of a fiduciary.

By way of background........I am a CPA focused primarily on tax and financial consulting matters for wealthy families. Although I am viewed "primarily" as a CPA, I believe that also being a CFP certificant is of significant value in representing my clients and their financial matters. Our firm does not manage money, does not offer specific investment planning advice (i.e. portfolio design, asset allocation, investment selection), and does not sell any "product" other than our "time". However, the majority of our practice "subject areas" are those articulated in the definition of "personal financial planning subject areas" in the Terminology section of the Exposure Draft.

Simply stated, my concern is that in my practice of being a CPA, providing services in "personal financial planning subject areas" and solely by virtue of being a CFP certificant, am I (1) in violation of the professional rules of conduct for failing to obtain a written agreement with my client and (more importantly) (2) am I either by rule or by implication of rule, subject to a fiduciary duty of care for all my interactions with clients (at least with respect to the listed subject areas) absent a written agreement with my clients to the contrary?

As I am sure you appreciate, there is a substantial overlap between the practice areas of CPAs (at least those CPAs practicing in the personal financial planning arena) and CFPs. It is precisely this overlap and the level of competence and integrity evidenced by these 2 designations that makes being a CPA/CFP valuable to me. However, I believe that the requirements of Rule 1.1 are overly broad.

In any case where a CFP is in "control" of a client's assets, whether such control is evidenced by the actual management of a client's financial assets or in the design/implementation of investment portfolios, I believe that a written agreement and a specific waiver of fiduciary duty, if appropriate, should be required. I believe it is inappropriate to introduce a fiduciary standard of care in the areas of consulting (income tax planning, retirement planning, estate planning, etc.). I believe that the principle of Integrity sets the appropriate standard for these activities. I also believe that in areas other than "control" of a client's assets, a written agreement should be a "best practices" recommendation and not a mandated rule.

Notwithstanding those specific comments, I believe that it is incumbent on the Board to provide significant additional guidance on where fiduciary duty is required and more importantly where not. I find it somewhat troubling that such a significant level of care is inserted into the rules in such a "back handed" manner. There is no mention of the fiduciary duty in any context other than in a delineation of the items an engagement letter must incorporate. The single sentence "[i]t will be presumed that the duty of care of a fiduciary is to be applied to the professional judgments made by the certificant......" seems to me to simply state that all of our judgments in the services we provide must be made with this level of care in mind. While I have no problem with setting very high standards for the profession, I do believe that setting a legal standard of fiduciary care is both overly broad and fraught with legal exposure.

The Q/A seems to echo this standard for all work with/communications to a client. In settings where the fiduciary duty of care is appropriate-where a CFP® certificant is retained by an individual to provide financial advice to an individual-the Exposure Draft does provide that the fiduciary standard will govern as the default duty of care, unless the parties agree in writing that they both want to choose a different standard.

Your introduction to the Exposure Draft very succinctly expresses my concern: Rules of Conduct. The Rules of Conduct establish a minimum level of professionalism required of certificants. The Rules of Conduct are binding on certificants, regardless of their title, position, type of employment or method of compensation, and govern all those who have the right to use CFP Board's marks, whether or not those marks are used.

Violations of the Rules of Conduct may give rise to CFP Boar