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CFP Board News - March 2008


FREQUENTLY ASKED QUESTIONS ON CFP BOARD'S REVISED ETHICAL STANDARDS

To help educate CFP® professionals about the updated ethical standards for CFP professionals that take effect July 1, 2008, CFP Board has assembled responses to frequently asked questions on the updated Standards of Professional Conduct, including the questions listed below. CFP Board welcomes additional questions about the revised Standards, including questions about the application of the Standards to specific situations, at standards@CFPBoard.org.

Q: Do the updated Standards apply to those who hold CFP® certification but who do not display the CFP® marks or hold themselves out as financial planners?
A: Yes. The updated Standards, as do the current Standards, require a baseline duty of care for all client relationships that involve an individual who holds CFP® certification. When CFP Board applies its Standards to an individual who holds CFP® certification, CFP Board’s focus is on the conduct of the certificant, not only the titles used to describe the certificant’s roles or services. A CFP® certificant is obligated to abide by CFP Board’s Standards of Professional Conduct, irrespective of whether the CFP® marks appear on the certificant’s business cards or stationery. Removal of the CFP® marks from one’s business cards or stationery does not relieve a CFP® certificant of the obligation to follow the Standards.

CFP® certificants have, on occasion, been asked by their companies to remove the CFP® marks from their business cards and promotional materials. Some such requests have been made based on misunderstandings of CFP Board’s Standards and their application. CFP Board encourages CFP® certificants in similar situations to notify CFP Board and to request that their company representatives contact CFP Board.

Q: What distinctions do the updated Standards make between financial planning services and other services that don’t rise to the level of financial planning?
A: The updated Standards apply to all CFP® certificants, but certain sections of the Rules of Conduct set forth additional requirements for CFP® certificants who provide financial planning services to clients. When a CFP® certificant provides financial planning or material elements of the financial planning process, the updated Standards require:
 

  1. A heightened duty of care to the client,
  2. Additional disclosures to the client or prospective client, including some that must be made in writing, and
  3. A written agreement governing the financial planning services.

The individual Rules related only to client engagements that rise to the level of financial planning or material elements of the financial planning process are as follows:

Rule 1.4 sets the baseline duty of care CFP® certificants owe at all times to clients: “place the interest of the client ahead of his or her own.” That same rule sets forth a heightened duty of care for CFP® certificants who provide to clients financial planning or material elements of the financial planning process: “the duty of care of a fiduciary as defined by CFP Board.” CFP Board’s definition of fiduciary is: “One who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client.”

Rule 1.2 describes information that must be disclosed by a CFP® certificant to clients and prospective clients if the services to be provided include financial planning or material elements of the financial planning process.

Rule 2.2 identifies information that must be disclosed by a CFP® certificant to all clients and prospective clients, regardless of whether the services to be provided rise to the level of financial planning. When the services do rise to the level of financial planning or material elements of the financial planning process, section (e) of Rule 2.2 requires that the disclosures be made in writing.

Rule 1.3 requires that if services to be provided include financial planning or material elements of the financial planning process, the certificant (or the certificant’s employer) shall enter into a written agreement with the client governing the financial planning services.

Q: Does conducting a needs analysis or suitability review reach the level of financial planning or material elements of the financial planning process?
A: There are a wide variety of activities that are labeled “needs analysis,” and some of those activities may reach the level of financial planning or material elements of the financial planning process. If a “needs analysis” is focused on gathering detailed information about multiple aspects of a client’s financial situation and analyzing that information in light of the client’s stated future goals, or if the analysis is used to make wide-ranging recommendations, that “needs analysis” is considered financial planning.

In contrast, if a “needs analysis” is focused on a limited component of the client’s financial situation, and does not involve other services related to financial planning, that analysis may not rise to the level of financial planning. For instance, if a client hires a CFP® certificant solely to purchase life insurance, the CFP® certificant will by necessity obtain information about the client sufficient to ensure that any policies recommended meet the client’s needs. If the “needs analysis” is focused solely on factors related to the client’s life insurance needs, that analysis may not rise to the level of financial planning.

A standard suitability review conducted in association with a transaction – a review that takes into consideration such basic elements as the client’s age, net worth and risk tolerance – does not typically reach the level of financial planning or material elements of the financial planning process.

The facts and circumstances of each situation are a key factor in CFP Board’s determination of whether a CFP® certificant has engaged in financial planning or material elements of the financial planning process.

About the Revised Standards of Professional Conduct:
On May 31, 2007, CFP Board’s Board of Directors announced the adoption of a revised version of CFP Board’s Standards of Professional Conduct, which sets forth the ethical standards for CERTIFIED FINANCIAL PLANNER™ professionals. The revised Standards become effective July 1, 2008 and apply to the more than 57,000 financial planners in the U.S. who are authorized by CFP Board to use the CFP® certification marks. CFP Board encourages CFP® professionals to begin applying the revised Standards to their daily practice well in advance of the July 1, 2008 effective date.

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BANKRATE.COM TO FEATURE SEARCHABLE CFP® PROFESSIONAL LISTINGS

Beginning in April 2008, Bankrate.com will offer the public the ability to search for CERTIFIED FINANCIAL PLANNER™ professionals through their site. The searchable database on Bankrate.com has clear benefits for CFP® professionals and the public: it will help connect you with affluent individuals in your area who are interested in working with a financial planner, and it will allow the public that uses Bankrate.com to find financial planners who have met CFP Board’s standards of competence and ethics.

The search features that will appear on Bankrate.com are essentially the same as those used on CFP Board’s Web site, allowing visitors to search by zip code radius, by city, by state, or by name. Individual CFP® professional listings will include name, company affiliation, business address and business phone number. These listings will be made up exclusively of CFP® certificants who have indicated to CFP Board that they practice financial planning and who have not chosen to opt-out of the Bankrate listings. CFP® professionals who wish not to participate in the Bankrate listings should opt-out no later than March 31, 2008.

Criteria for Inclusion in Bankrate Listings
The Bankrate listings are available to CFP® professionals at no cost. To be included in the listings, you must 1) currently hold CFP® certification, 2) have a valid business address and phone number in CFP Board’s records, 3) have identified yourself to CFP Board as being a practicing financial planner, and 4) not have chosen to opt out of the Bankrate listings.

Opt-Out Procedures for Bankrate Listings
If you wish not to have your information included in the Bankrate listings, you may opt out through CFP Board’s Web site by following these steps:
 

  1. Log in to your online account at www.CFP.net/login
  2. Visit the “Contact Information” section of your account
  3. Click the checkbox beside the “Opt-out of Bankrate.com planner listings?” option
  4. Click the “Save Changes” button at the bottom of the screen

If you do opt out of this service and later wish to opt in, you may visit your online account and de-select the “Opt-out of Bankrate Listings?” option. Your information will then appear on the next list CFP Board provides to Bankrate (updated listings will be delivered on a monthly basis at the beginning of each month).

The Bankrate listings opt-out feature is separate from other opt-out options offered by CFP Board and will not affect your decision to opted out of lists and communications CFP Board may provide to third parties, such as continuing education sponsors and financial planning-related organizations.

Verify and Update Your Record with CFP Board
We encourage all CFP® professionals to keep their records with CFP Board updated on a regular basis.

To verify that your record with CFP Board contains a current and valid business address and phone number:
 

  1. Log in to your online account at www.CFP.net/login
  2. Visit the “Contact Information” section of your account
  3. Review and make any necessary updates to your business address and phone number
  4. Click the “Save Changes” option at the bottom of the screen

If you wish to be included in the Bankrate listings, you may update your record with CFP Board to reflect that you currently practice financial planning by following these steps:
 
  1. Log in to your online account at www.CFP.net/login
  2. Visit the “Demographic Information” section of your account
  3. Click the checkbox beside the “I am a personal financial planning practitioner” option
  4. Click the “Acknowledge and Submit” option at the bottom of the screen

CFP Board expects its partnership with Bankrate will provide increased visibility for CFP® certification and direct benefits for CFP® professionals who choose to have their information included in the Bankrate listings. If you have any questions about CFP Board’s partnership with Bankrate.com, please contact us at 800-487-1497 or mail@CFPBoard.org.

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CFP BOARD ADOPTS STRENGTHENED GOVERNANCE POLICIES FOR DISCIPLINARY PROCEDURES

CFP Board’s Board of Directors recently voted, by unanimous decision, to adopt new governance policies related to the oversight of its Disciplinary and Ethics Commission (Commission), the body that administers disciplinary hearings. The new policies increase safeguards to the public through clear accountability, increased transparency and public representation on the Commission.

“These governance changes incorporate best practices of the sort CFP Board introduced in the strengthened ethical standards for CFP® professionals that take effect in July 2008,” said David G. Strege, CFP®, Chair of CFP Board’s Board of Directors. “They are based on extensive and thoughtful examination of best practices of corporate governance and of professional review processes inside and outside the financial services industry. Without compromising the integrity, autonomy or independence of CFP Board’s long-stranding disciplinary process, we have strengthened our procedures to ensure certificants and their clients have access to a fair, objective and consistent professional review process.”

While the governance policy changes have no effect on CFP Board’s Disciplinary Rules and Procedures, operational changes have also been implemented to better support the Commission’s administration of the hearing process. CFP Board staff counsel will be available to offer the Commission guidance on CFP Board’s disciplinary procedures and on possible interpretation of the ethical standards for CFP® professionals. CFP Board has also retained independent legal counsel to act in an advisory role to its Appeals Committee, the body that reviews challenges to Commission decisions. Hearing Panels will continue to deliberate autonomously.

“CFP Board strengthened the ethical standards for CFP® professionals with changes that take effect in July 2008,” said Dan Candura, CFP®, who served as Chair of CFP Board's Professional Review body and is a current member of the Board of Directors. “During the process that led up to the revised standards, we recognized a need to provide more consistent support to the dedicated volunteers who serve on the Commission through added staff involvement in the process. By adding public representation on the Commission, CFP Board looks to create greater accountability at a time when more and more Americans rely on financial planners to help plan for their financial security.”

Commission members Harv Ames, CFP®, Diana Simpson, CFP®, Barry Kohler, CFP®, James Williams, CFP® and Grace Worley, CFP® resigned from the Commission. CFP Board extends its appreciation to them for their service on the Commission and the time they have volunteered to support the activities of CFP Board.

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CFP® MARKS IN THE NEWS

CFP® certification was mentioned prominently in several widely-read consumer publications during the first months of 2008.

Sharon Epperson’s article “Money Smart - Find the Right Financial Adviser” was featured in the February 2, 2008 edition of USA Weekend, distributed nationally with the weekend editions of many newspapers, and advised readers to look for financial advisers who hold CFP certification, highlighting the education – and continuing education – required of those who hold the CFP® marks.

The February 17, 2008 issue of Parade, distributed nationally with the weekend editions of many newspapers, featured a story on long-term care insurance that advised readers not to choose a policy based on a seller’s recommendation, but to seek second opinions from CERTIFIED FINANCIAL PLANNER™ professionals.

Jane Bryant Quinn, in the March 3, 2008 edition of Newsweek, directed readers to look for the CFP® mark as a sign of credible financial planning, calling CFP® certification the “best-known credential” and noting the “serious courses” and “difficult exams” required to obtain CFP® certification.

Highlights of media coverage of CFP® certification are available on the CFP® Marks in the News section of CFP Board’s Web site.

CFP Board continues its efforts to promote awareness of CFP® certification among media outlets and the audiences they serve. Those efforts are greatly enhanced by the many CFP® professionals who are engaged in their own efforts to reach national and local media with the message of the benefits of financial planning and working with a CFP® professional. We appreciate all of you who help further awareness of CFP® certification across the country through your media contacts and your involvement in your communities.

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BOOK AUTHORED BY CFP® PROFESSIONAL

CFP Board congratulates Jenna Mitchell Everett, CFP® on the recent publication of her book, 50 & Forward: A Woman’s Journey of Financial Awareness and Self-Discovery.

CFP Board welcomes information about the activities and accomplishments of CFP® professionals. If you have information you would like to share with CFP Board, please contact us at mail@CFPBoard.org.

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FINANCIAL PLANNER VOLUNTEERS SOUGHT FOR WASHINGTON, DC FINANCIAL LITERACY FAIR

Capital Area Asset Builders and DC Saves seek financial professionals to provide free general financial planning information to the public at a Financial Literacy Fair in Washington, DC on Saturday, April 5, 2008. The Fair is a free event designed to help people increase their financial knowledge, learn more about money management and take positive steps to increase their financial security. In addition to free tax preparation services and workshops presented by leaders in the financial services industry, the Fair also offers attendees opportunities to receive a free credit report and meet one-on-one with credit counselors. Financial professionals will be asked to meet with individuals, couples, and families for approximately 15-20 minutes to offer free, no-strings-attached information to help them create a financial plan.

The Financial Literacy Fair will be held at the Boys and Girls Club at THEARC, on Saturday, April 5, from 10:00 a.m. to 2:00 p.m. Volunteers will be required to volunteer for 2 hours, from noon to 2:00 p.m.

Those interested in participating should contact Linda Stroman at DC Saves directly at dcsaves@caab.org or 202-419-1440 by March 21.

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GRANT FUNDING OPPORTUNITIES FROM CFP BOARD

CFP Board seeks to provide grant funding to innovative and sustainable projects that promote an understanding of the benefits of financial planning and provide underserved populations with access to competent and ethical financial planning. The application deadline is April 30, 2008. [Application deadline has been extended to May 15, 2008.] Read more about CFP Board’s 2008 Financial Planning Grants Program.

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CFP BOARD SEEKS CFP® PROFESSIONALS TO PARTICIPATE IN FINANCIAL PLANNING CLINIC IN WASHINGTON, DC ON SATURDAY, SEPTEMBER 13, 2008

CFP Board seeks CFP® certificants to participate in a Financial Planning Clinic on Saturday, September 13, 2008 at the Grand Hyatt Washington in Washington, DC.

The event is an exciting way to reach the public with first-hand experience of the benefits of financial planning, and the format is simple – volunteer CFP® professionals meeting one-on-one with consumers to answer their financial questions.

The Financial Planning Clinic in Washington, DC builds on the successes of similar events CFP Board hosted in Los Angeles and Boston where hundreds of CFP® certificants made a positive difference in the lives of thousands of people by sharing their time and expertise to help individuals, couples and families sort out their personal finance questions and concerns.

For many, the events were an introduction to the benefits of financial planning. More than 95% of attendees found their experience so rewarding that they would recommend it to others, while the same percentage of volunteers stated that they would participate again. Volunteers expressed how much they enjoyed interacting at such a personal level with so many consumers of diverse financial backgrounds.

The Financial Planning Clinic will be held at the Grand Hyatt Washington in Washington, DC from 11:00 a.m. to 4:00 p.m. on Saturday, September 13, 2008. Volunteers will be required to participate for the entire time. A 30-minute lunch break and complimentary lunch and refreshments will be available. Only CFP® certificants in good standing with CFP Board may participate.

If you are interested in participating at the Financial Planning Clinic, apply online or contact CFP Board by e-mail at clinic@CFPBoard.org or by phone at 800-487-1497 with the following information:
 

  • Name
  • Phone Number
  • E-mail Address
  • Mailing Address
  • If you are multi-lingual, the languages you would like to use at the Financial Planning Clinic
  • The general financial planning topics you are most interested in discussing with attendees

For additional information about CFP Board’s Financial Planning Clinic in Washington, DC, visit www.CFP.net/clinic.

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