Comments on Exposure Draft (R-S)

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 R through S.

Return to the main index of comments


GERALD J. RACHELSON, ATTORNEY, CPA, CFP®

Subject: Comment on allowing client and CFP to "negotiate fiduciary standards"

I am submitting my comments regarding the Board's authorizing the client and the planner to agree upon the fiduciary standards.

I recall reading about it, but am unable to locate it.

In addition to being a CFP, I am also an Attorney. If you are looking for credibility, I have three masters degrees, (two of law including a Masters of Tax), I am a CPA and have the CTLC designation. My primary focus is estate planning from a legal perspective. I also speak at various senior seminars and have taught elderlaw courses for the Georgia Society of CPAs. I am also a senior citizen. I am retired from the federal government

In reading the Boards seeking to allow the client and CFP to agree upon the fiduciary standard, I first remind myself that I do not know the underlying considerations or pressures for making changes. However, after recognizing that I have no knowledge of such, let me give you my immediate impressions (and objections).

You'll have to pardon the language, but the language indicates my strength of opinion. My initial thoughts were "assinine", "naive" ,"dumb", "clearly undermining the interests of the public", undermining the status and image of a CFP" , "Giving the CFP an ethical license to screw the public." Creating a 'license"Giving CFPs a 'blackeye" and creating full employment for attorneys.

I start off by asking you have you ever the entire rental agreement when you went to rent a car? My point is a CFP, after consultation with his/her attorney could insert fine print language on the back of the "engagement agreement" which permits an extremely low "fiduciary duty of care." Thus, if the senior citizen signed the agreement, the senior citizen would, according to the CFP standards, "negotiated" or agreed upon" a lesser duty of care. I would also strongly doubt that the issue was even discussed between the planner and the client. Yet legally, from the CFP perspective, the ethical standard s have been satisfied. Not only does it not meet my "fair play" standards, but I have a question as to whether it would stand up in court. Additionally, the various financial news media would have a field day, thus resulting in a black eye and greatly diminishing the value of the CFP.

From a legal perspective, it is quite amusing. You have two non-attorneys (planner and client) attempting to negotiate a legal definition and concept. Good luck. Second, the planner and client could agree upon a stricter than legal standard, however, there are legal implications and concerns when there is alleged agreement upon a fiduciary standard that is less than or weaker than what the state law provides. Your attorneys will probably tell you that in order to give up (or waive) a legal right, there must be a clear and unequivocal waiver. If the planner were able to obtain such a waiver, the waiver would be the product of at least "some" verbal discussion. In the potential lawsuit or arbitration, the client would most probably have a different version or recollection of what took place. If the client (particularly a senior citizen) has been damaged or otherwise suffered an injury, there is a greater propensity for the judge and/or jury to embrace the testimony of the senior citizen irrespective of what did in fact take place. We are all aware of the weakness of the jury and legal system (sometimes called "the deepest pocket" doctrine." As a rippling effect, this (losing the law suit) now creates further damage to the planner's prestige and credibility even though the planner may, in reallity, have done nothng wrong in the original case. One bad case would be appropriately publicized to the detriment of previously prestigeous CFP designation.

If I have my negative opinions, can you imagine the field day a consumer oriented financial writer would have? Frankly, this one dumb act on the Board's part, would, in my opinion, forever blacken the image of the CFP designation which Board has for many years has protected and created an outstanding public image of the CFP designation.

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ROBERT T. RAMOS, CFP®, ChFC

Subject: Proposed Ethics changes

When I first became certified 2 years ago, I thought it was very interesting when I read over the Ethical/Code of Conduct responsibilities.

The CFP Board at that time required certificants to notify the Board in the event that an ethical/Code of Conduct violation was suspected, yet, there was no responsibility/obligation to inform the prospective client of such concerns. If the CFP Board's goal is to hold certificants to higher a ethical standard and protect the interest of the client, then shouldn't the first responsibility/moral obligation of the certificant be to inform the prospective client of ethical concerns?

Additionally, I noted in the briefing prior to the actual text changes that companies or those in a supervisory position are immune from CFP Board action. While the actions of an individual are solely their own, the old adage "Birds of a feather flock together" is very true in this industry. If there is a pattern of unethical/illegal conduct at an institution/firm or by persons under the supervision of an individual, why wouldn't the CFP Board sanction (in some fashion) those in supervisory roles?

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BILL RAMSAY, CFP®

Subject: Practice Standards

In the FAQs about the Exposure Draft, the board states:

....The proposed rules do not allow the default fiduciary duty of care standard to be hidden or waived in a fine print disclaimer. The Exposure Draft requires that the duty of care standard agreed upon by the CFP® certificant and client be stated in a written agreement and be discussed between the parties, including a specific discussion of "whether the certificant will be held to the duty of care of a fiduciary under the agreement."

I do not see that in the Exposure Draft. In the exposure draft, 1.1 e. certainly looks as if a typical Broker Dealer new account form with its disclosure would cover the standard. I'm sure that you want it to be made clearer to the public, but I don't think that's been accomplished with the proposed standards, and I'm not sure it can be unless you spell out clearly what exactly must be stated in writing when a fiduciary standard is not going to be used. A separate form that must be signed by a client stating nothing but "Our relationship will not be under a fiduciary standard of care" is about the only way to truly get the disclosure to the members of the public that need it the most.

Leaving it to "must discuss with the client" is entirely without merit as it obviously leaves room for it not to be told and since after a very short period of time a typical client would have no recollection about whether they were told about fiduciary care or not, there is virtually no risk to a practitioner ignoring that standard. In fact there is a much bigger problem as most people don't know what a fiduciary standard is, and if explained to them, my 20+ years of experience tells me that most people would say their broker/agent/advisor/planner/cfp/chfc/caa/cac/cam/cas/pfs/clu/cea/rfc/rfp/rfs is treating them with a fiduciary standard.

You state also in the FAQ that

....Some clients may wish to select a duty of care standard more specific than the default fiduciary standard....

It makes the Board sound like a trade association or a political spin consultant when language like that is used. This is a trust profession and it is virtually always the professional's choice as to what standard they will be working under, at least with the clients who are in the most need of being served under a fiduciary standard- those who are the least sophisticated and knowledgeable.

The Board knows better and can do better.

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LEGRAND S. REDFIELD, JR., CLU, ChFC, LUTCF

Subject: CFP Code of Ethics and Professional Responsibility.

Having compared the existing with the proposed changes, I must lend my voice to those who feel that your actions are incorrect and a detriment to the CFP credential. I agree with information provided by FPA in which they stated:

  • FPA believes that the adoption of these revisions would weaken - not strengthen - the standards under which CFP certificants provide financial planning services.
  • The process used in developing the proposal requires greater transparency. It is our early understanding that comments from the public will not be posted for review, unlike the standard comment procedure used by the Securities and Exchange Commission.
  • CFP Board's exposure draft approach to the duty of care owed to clients is typical of our significant concerns. Although it appears to require that certificants adhere to a fiduciary standard, it creates a loophole by permitting them to specify a lower standard in writing. An optional fiduciary standard is at odds with the long-standing requirement by the SEC that anyone holding out as a financial planner must be registered under the Investment Adviser Act of 1940, as part of the federal statute, thus imposing a fiduciary duty. The SEC correctly does not prohibit employment by a broker dealer firm, insurance company, or other party as long as these relationships are adequately disclosed.
  • In addition, as written, it would be optional for a financial planning practitioner to act as the CFP Board puts it "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." We believe allowing the duty of care to vary would simply add to the considerable consumer confusion in the marketplace regarding what accountability the CFP Board expects of the certificant to the client.

There is no way to appease all of the people who peruse the CFP mark, but it is apparent that in your haste to make them all happy you have missed the point. In fact, I see no reason to pursue the CFP credential if the proposed standards are approved.

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NANCY REED

Subject: Standards

Hi Friends,

I have not read in detail on any of this matter - I am finishing my course work and preparing for the November exam - my only comment is that - every time I read the WSJ they refer to the CFP as the "gold standard" with that - why would you want to loose such a rating.

Best of luck.

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STEVEN M. REENTS, CFP®

Subject: Comments on CFP Code of Ethics

I would like to express my concern that the proposed changes to the CFP Code of Ethics and Professional Responsibility will hurt the integrity of the CFP designation. I believe the public looks for a Certified Financial Planner not only as a source of competence, but as an assurance that a CFP will act in their best interest. If the Code of Conduct allows for a CFP to not act as a fiduciary, the public may only look upon the designation as an academic title rather than basis upon which to trust.

I know the default standard is that of a fiduciary, but I believe the public could be swayed by a few news reports revealing the fiduciary loophole, thus planting a seed of doubt that could keep people from viewing a CFP different from any other credential.

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PETER J. REGAN, CFP®

Subject: Proposed Revisions to the CFP Board's Ethical Standards

The proposed revisions are very disappointing.

How is the public interest served by allowing a CFP to ignore fiduciary responsibilities through notification?

There are already thousands of financial services organizations with high levels of knowledge that provide services on this basis (let the buyer beware). They do not need the help of CFP practitioners to be successful.

The general public on the other hand does need our help. All practitioners should be held to a fiduciary standard to increase the public's confidence in our work.

With luck, over time most financial service providers will see the value of this standard and will adopt it themselves.

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REGENT ATLANTIC CAPITAL, LLC®

The CFP Board of Governors has invited public comments on an "Exposure Draft" of revisions to the CFP Board's Code of Ethics and Rules of Conduct, This letter represents the views of the 15 Certified Financial Planners working at RegentAtlantic Capital, LLC, a fee-only wealth management firm responsible for some $1.4 billion of clients' assets.

Our comments concern proposed Rule of Conduct 1.1 .e, providing that a CFP certificant will be held to a fiduciary standard of conduct except in those situations where, after a discussion with the client, the client agrees that the certificant will be held to a different standard. We refer to this proposed rule as the "Fiduciary, Unless Rule". For the following reasons, we believe the Fiduciary, Unless Rule would represent a giant step backwards both for those of us who view the work of Certified Financial Planners as an emerging "profession" and for the public at large.

1. We believe most advisors who identify ourselves as Certified Financial Planners would like to be viewed by the public as members of a true profession, and we assume the CFP Board shares that perspective. The strength of a claim to be a "professional", however, similar to the strength of any brand or trademark, hinges on its clarity and consistency, i.e., the public's perception that they know what they're dealing with and don't have to dig deeper to make sure there's no misunderstanding. If one has to say, "I'm a member of the XYZ profession, but you should know that . . .", that professional designation suffers an instant loss of meaning and credibility.

2. In those callings that are universally recognized as true professions, it is understood that the professional puts the interests of those he or she serves above his or her own interests. Whether one invokes the term "fiduciary" or not, a professional is understood to be a person from whom a client can expect the very best advice and service that person can reasonably provide, rather than advice and service that is merely suitable, satisfactory, adequate, or not incorrect or inappropriate. Doctors, lawyers, accountants, nurses, architects, pharmacists and other professionals don't come in two flavors: those who always put their clients' interests first by providing their very best advice, and those who, with their clients' consent, are free to adhere to some different standard.

3. Our nation, like all other First World nations, faces a disturbing irony. The industrial, commercial, educational, and political revolutions of the past 200 years have given most citizens a level of economic well-being and security unimaginable in any prior century. Yet the vast majority of those citizens remain financially illiterate, having received no formal schooling in the concepts of personal finance and investments and being by and large uninterested in any disciplined study of those subjects as adults. Our fellow Americans live in the wealthiest of times, yet know little about managing their wealth. Our nation would be well-served if more individuals realized that they needed help with their financial affairs, and for those who desire objective, conflict-free help from someone who always has their best interests in mind, we should make it easy for them to find it.

4. The CFP Board has provided extensive comments about the proposed revisions in an accompanying "Frequently Asked Questions" piece. The crux of the Board's justification for its Fiduciary, Unless Rule appears in the eighth and nine Q&As. In the eighth Q&A, the Board correctly notes that a blanket rule applying a fiduciary standard of conduct to all work-related activities of all certificants would be inappropriate, because some certificants perform duties not involving advice to clients. The Board goes on, however, to acknowledge that there are "settings where the fiduciary duty of care is appropriate", giving as an example where a "certificant is retained by an individual to provide financial advice". The revisions therefore provide that the fiduciary standard will apply to all such situations "unless the parties agree in writing that they both want to choose a different standard."

Anticipating the obvious question - why would anyone choose a different standard? - the Board in the ninth Q&A offers its answer:

"Some clients may wish to select a duty of care standard more specific than the default fiduciary standard. A fiduciary obligation is a general legal concept provitling that the person governed by the obligation needs to act in the best interest of the beneficiary. That general principle does not always make clear the exact obligations of each party to an agreement."

This can charitably be described as belaboring the obvious to no avail. No one would dispute that the fiduciary standard is a "general" standard that does not spell out the "exact obligations of each party". No one would dispute that most parties to contracts are well served by describing as clearly as they can what each one expects from the other. The glaring logical gap in the Board's explanation is that the application of a fiduciary standard DOES NOT EXCLUDE any effort to describe the parties' rights and obligations in greater detail and precision.

The ninth Q&A goes on to offer three unpersuasive examples of different standards that purportedly might supplant thc fiduciary standard. There is a "professional person" standard, a term apparently coined by the Board that would look to what people with similar skills and training in the particular locale would do under similar circumstances. There is a second standard referring to what an investor, investment professional, tax professional, or attorney would do under similar circumstances. The third option is a description of the tasks to be performed and the standards that will apply to them. While each of these is an example of how an agreement between a client and a certificant might be further fleshed out, NONE of them is inconsistent with a fiduciary standard, and NONE of them answers the threshold questions that every client seeking financial or investment help needs answered: Will you, as my advisor, provide advice and services with a view to my best interests? Will you do whatever you can to avoid any conflicts between my interests and your interests? If a conflict is unavoidable, will you alert me to that conflict?

5. The information asymmetry between people needing advice and people who dispense advice is every bit as large in the field of finance and investments as in medicine, law, accountancy, architecture, or other fields involving professionals. Other professionals, if given an opportunity, could surely come up with reasons why, under many clients' particular circumstances, the clients should be satisfied with a standard of conduct other than the fiduciary standard. Such waivers of the fiduciary standard are not countenanced, however, because the waivers would necessarily be the result of the well-informed bargaining with the uninformed. CFP certificants should also be prohibited from exploiting their inherent information advantage vis-a-vis their clients.

6. The end result, were the Board's proposal to be adopted, is all too obvious. Those financial professionals who want to enjoy the distinction and commercial advantages of being CFP certificants, but who do not wish to be held to a fiduciary standard, will develop effective methods of persuading their clients that some other standard is "more appropriate" to their situation. Those CFP certificants who want the term Certified Financial Planner to represent a true profession, and who understand that professionals of necessity operate under a fiduciary standard, will be left trying to explain to the public why not all certificants play by the same rules. And the public will remain as confused as ever, not having any professional designation they can rely upon when they go looking for unbiased advice and help.

7. In sum, while we applaud the Board's efforts to update the Code of Ethics and Rules of Conduct governing CFP certificants, the proposed Rule 1.1.e is seriously misguided and would forfeit an opportunity to move Certified Financial Planners clearly into the ranks of true professionals. The Board has failed to provide any sound reason why a fiduciary standard of conduct should not apply to all situations in which a client is looking to a certific.ant for financial planning and investment assistance. What Rule 1.1.e should instead provide, in addition to a mandatory fiduciary standard for such engagements, is encouragement for the parties to be more specific about their rights and obligations to the extent they deem it helpful.

Respectfully submitted,

David H. Bugen, CFP®
Edward M. Stuart, CFP®
Christopher J. Cordaro, CFP®
William T. Knox IV, CFP®
Deirdre C. LaRue, CFP®
Michael R. Steiner, CFP®
John Prokop, CFP®
James W. Reilly, CFP®
Joseph Leone, CFP®
James R. Sonneborn, CFP®
Thomas Farrell, CFP®
Megan M. Brozowski, CFP®
Brian Kazanchy, CFP®
J. Brent Beene, CFP®
Gregory R. Allison, CFP®

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MARK W. REKOW, CFP®

Subject: CFP Board Code of Ethics and Professional Responsibility

I have to say that I'm shocked and disappointed by your recent proposed changes. This is déjà vu ala the Merrill Rule. We CFP's need to clearly delineate our responsibility to our clients and that fundamentally is based on an unswerving commitment to our fiduciary relationship with them. Period.

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LAURIE D. RENCHIK, CFP®

Subject: Proposed CFP Board Code of Ethics Changes

I would like to take a moment to voice my concern about the proposal. To summarize I believe that the revisions would weaken - not strengthen the standards which CFP certificants provide financial planning services. I believe that permitting planners to opt for a lower standard in writing will have a profound negative long-term effect on the profession. Allowing the duty of care to vary will also add to the considerable consumer confusion in the marketplace. Thank you.

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RON A. RHOADES, B.S., J.D., CFP®

Re: Comment regarding CFP Board's Proposed Code of Ethics and Professional Responsibility and Financial Planning Practice Standards

I wish to thank the members of the CFP Board for their diligent hard work on the revisions to the Code of Ethics and Practice Standards applicable to CFP® certificants. Given the ongoing development of the profession of financial planning, and concurrent developments affecting registered investment advisers and the securities industry as a whole, the CFP Board is to be commended for seeking to address the tough and extremely complex issues of today. Thank you as well for permitting CFP® certificants the opportunity to comment on the proposals.

In this comment letter [note: Ron A. Rhoades, BS, JD, CFP® serves as Director of Research and Chief Compliance Officer of Joseph Capital Management, LLC, a fee-only registered investment adviser serving as private wealth manager to high net worth individuals, most of whom are retirees. Ron is the author of The Science of Investing: How To Use Academic Research To Reduce Risks and Enhance Returns (2003) and numerous articles regarding tax planning, estate planning, investment due diligence, financial planning, and risk management planning. He has frequently commented on the SEC's "Merrill Lynch Rule," as to the application of fiduciary duties to the activities of registered representatives providing services via fee-based brokerage accounts. While the principles set forth in this correspondence relating to the nature of fiduciary status, and while strict adherence to fiduciary duties are followed at Joseph Capital Management, LLC, this correspondence is submitted by Ron A. Rhoades personally and not on behalf of his firm.] I address the key issue confronting the CFP Board - whether to permit CFP® certificant holders to choose which legal standard (i.e., fiduciary or non-fiduciary) will be applicable to their financial planning activities. I urge the CFP Board to undertake substantial changes to the provisions of the proposal as they relate to the fiduciary status and the fiduciary duties of CFP certificants.

Read Mr. Rhoades' comments on fiduciary status and the fiduciary duties of CFP® certificants in pdf format.

Re: Alternate Draft, CFP® Rules of Professional Conduct

Alternate Draft Presented for "CFP® Rules of Professional Conduct." I believe it is incumbent upon those who oppose the direction taken by the CFP Board to also suggest an alternative proposal to the standards of conduct which should govern CFP® Certificants. In the present instance I seek to demonstrate to the CFP Board that it is possible to develop reasonable standards of conduct based upon fiduciary principles. Hence, I enclose alternate proposed draft of CFP® Rules of Professional Conduct for consideration by the CFP Board during its upcoming deliberations and for purposes of fostering discussion of these important principles.

The Key Issue Of The Fiduciary Standard As Applying To All Financial Planning Activities. I previously commented, by letter dated July 27, 2006, and in that correspondence I set forth the legal rationale behind the imposition of the fiduciary standard upon all CFP® Certificants who are providing financial planning advice. [note: For the reasons given in my prior comment letter, I disagree with the proposal to grant to CFP® certificants the ability to renounce or disclaim fiduciary status, for important reasons relating to the development of financial planning as a profession, the need to protect clients who do not possess the knowledge to protect themselves from those in a far superior position of knowledge and expertise in those situations in which a close relationship based upon trust and confidence arises, and due to public policy concerns.] The issue of fiduciary status for all CFP® Certificants engaged in financial planning activities is the paramount issue before the CFP Board, and its resolution will determine not only the content of the Rules of Conduct but, perhaps, as well, the very existence of financial planning as a discrete profession in the years ahead and the future existence of the CFP Board of Standards, Inc.

Candid Discussions Should Follow. I am aware that many of the Rules which I advance, which provide greater specificity in the guidance of conduct of CFP® Certificants than the CFP Board's proposed revised rules of conduct, may be controversial. This draft is presented to foster discussion of these important issues with the view to enabling the practice of the Certified Financial PlannerT to move forward as a profession based upon fiduciary principles. All who seek to participate in the debate and discussion ahead should welcome the advancement and discussion of different points of view with the goal of encouraging the continued development of the profession and the advancement of the public good.

Request To The CFP Board For Referral Of Exposure Draft, and This Alternate Draft, Back to Committee. Attached hereto is a preliminary alternate draft of CFP® Model Rules of Professional Conduct. I urge the CFP Board to undertake the following actions:

  • Adopt fiduciary principles, for the sake of the profession of financial planning, the clients we serve, and the general public, to the effect that financial planning services should and must always be performed by CFP® Certificants under the protective umbrella of the fiduciary standard of conduct.
  • Refer the CFP Board's Exposure Draft back to a committee for the purpose of formulation of a "First Amended Exposure Draft" based upon fiduciary principles, for later presentation to the CFP Board and subsequent release to the public for commentary. In this regard, it is self-evident that no one has a monopoly on the judgment and insight that such a comprehensive evaluation of professional standards demands. Sessions of a committee charged with formulation of an Amended Exposure Draft should be open both intellectually and in the physical sense of an open town meeting. Anyone who wants to share their views should need only to ask. Many others, representing specific areas of expertise or particularly crucial and controversial points of view, should be invited to attend committee meetings and to share their time, skill and expertise. Additionally, a wide variety of resources on standards of conduct should be reviewed, including but not limited to the following rules and standards (from which much of the enclosed text was compiled and derived):
    1. Investment Advisers Act of 1940 and Rules Promulgated By the S.E.C.
    2. Certified Financial Planner Board of Standards: Financial Planning Practice Standards
    3. Certified Financial Planner Board of Standards: Code of Ethics and Professional Responsibility
    4. International Organization for Standardization - Uniform Standards of Conduct (in development)
    5. FPA's Code of Ethics
    6. NAPFA's Code of Ethics and Fiduciary Oath
    7. AICPA's Statements on Responsibilities in Personal Financial Planning Practice
    8. CFA Centre for Financial Market Integrity's Asset Manager Code of Professional Conduct
    9. Investment Adviser Association - Best Practices for Investment Adviser Codes of Ethics
    10. Center for Fiduciary Studies and related organizations and resources
  • Then publish a "First Amended Exposure Draft" for purposes of commentary and discussion. Comments which are submitted should be made publicly available as a means of fostering discussion.

Great Care and Deliberation Is Required; No Rush Should Be Undertaken To Adopt Revised Rules of Conduct. The adoption of revised rules and standards governing the conduct of CFP® Certificants is not a process to be rushed or hurried. Other professional organizations have proposed codes of conduct, only to have them substantially re-written and then reproposed, often time and time again, over many years. Hence, it is incumbent upon the CFP Board to refer the current draft back to a committee of experienced CFP® Certificants and other skilled participants, with guidance from the CFP Board that fiduciary principles are always to be followed.

Even though any code or rule can be amended following its actual adoption, it is highly important to "get it right" the first time, in order to demonstrate and affirm to the securities industry, state and federal regulators, and the general public that the Certified Financial Planner Board of Standards, Inc. is the leading organization in the United States, and the world, with respect to the establishment of practice standards for the emerging profession of financial planning. While, in the end, every ethical rule must be tested against real situations, through care and diligence the fundamental principles of the profession of financial planning can be firmly established.

Preserve The Future Of Our Profession and That Of the CFP Board. There are important questions facing the CFP® Certificant community. "What environment do we want to create?" "What environment do we want to work in?" I fear for the continued viability of the CFP Board should fiduciary principles not be embraced, as many CFP® Certificants would likely turn to other or new organizations which do adopt fiduciary principles to govern their conduct as professionals. I would again urge the CFP Board to set the tone for application of fiduciary duties to all CFP® certificants, to adopt standards of conduct which elaborate upon these important principles, and to provide guidance to all Certificants as they go about the profession of financial planning.

Thank you again for the opportunity to submit these comments. I appreciate the hard work of the CFP Board as its seeks to tackle these all-important and extraordinarily complex issues.

Read Mr. Rhoades' Alternate Proposal in pdf format.

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RON RICH, CFP®

Subject: Code of ethics

I am writing in regards to proposed changes to our code of ethics statement. First let me say that all CFP's must and should be held to the standard of a fiduciary in all matters regarding the client. Disclosing how one is compensated or potential conflicts of interest is not sufficient. Only the fiduciary standard of conduct is adequate to insure that we act and are perceived as acting in the best interest of the client. Anything less diminishes our profession and ourselves as professionals. Please tell me why would anyone have a problem with a code that says, Act in the best interest of the client?

As a fee only advisor and I don't have a problem with putting my client first and those in our profession who do should find employment elsewhere so they can act in their own interest without consequences.

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CINDY RICHEY, CFP®

Subject: Proposed changed to Ethics Code

I concur with the FPA's concerns about these proposed changes. There should be no "loophole" in the fiduciary requirement.

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NATHAN J. RICKS, CFP®

Subject: Proposed Changes

As a CFP Certificant, I strongly disagree with some of the proposed changes being considered by the CFP Board. The three areas that I feel most strongly about are outlined below.

Practice Standards - Implementation of the practice standards was one of the most contentious issues ever faced by this profession. They are the key component of the Code that set apart the financial planning profession and help with public understanding and professional recognition. They are what set us apart from other advisors/salespeople and provide a fundamental guideline by which our work can be judged. Practice standards are prevalent in most other true professions-medical, accounting and I'm sure, dental and probably more than any other reason, helped establish that community as a profession. To eliminate them now would be a huge step backward.

Standard of Care - The current standard requires that a financial planning practitioner act in the best interest of the client. The revisions create a rule allowing a CFP licensee to choose a lower standard of care for his clients. In other words, he/she can just "opt out" of providing for his clients' best interest. This "opt-in fiduciary standard" creates two completely different levels of protection for consumers/clients. Now, I ask you, when clients seek the advice and counsel of an advisor, whether it's a CFP licensee, an insurance agent or a stockbroker, are they even remotely considering that the advice they will receive is in any way not in their best interest? I don't think so! Clearly the consumer loses in this scenario and so does the profession.

Disclosure - You know what the current rules are-disclose anything and everything that could potentially affect the relationship and the client has the right to ask for it any time he wishes. The proposed rules call for a written description (that's the good part) of compensation arrangements as required by industry regulation (that's the bad part). The new rules also require the certificant to discuss terms for offering proprietary investment products (the really bad part) but does not require written disclosure of such terms. The revisions also eliminate the provision specifically requiring a certificant to inform clients of their right to ask for information about the certificant's compensation (the really, really bad part). If allowed, these revisions seem to rely on the ADV and other disclosure documents and does not require full disclosure of all charges and compensation, particularly related to insurance commissions.

I trust that the CFP Board will act in the best interest of the public and the profession, by not making the proposed changes.

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CHARLES D. RIGSBY, CFP®

Subject: Proposed Revisions to CFP Board's Ethical Standards.

My first reaction is that this action is less a matter of pragmatic resolution and is more a matter of "turf."

I do object to the open nature of potential application. For example, would a planner who is paid only for the planning be required to inform (in a fiduciary role) the client that similar/identical services are available free or at least inexpensively on the internet? Would the planner have a fiduciary obligation to provide specific examples to the best of her/his ability?

I am concerned that our organization has many that would review that questions above, make the evaluation of "We can see where that's going," and file the questions "appropriately." Sarah Ball Teslik's comments on guilds in the last letter can be applied in all manner of ways.

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JOHN K. RITTER, CFP®, CFS

Subject: Comments on Exposure Draft

We have three planners in our office that use the CFP marks. We were obviously anxious to see the exposure draft, especially after hearing Ms. Teslik's comments at the NAPFA National Conference. She said on multiple occasions that "we would be happy" with the changes. I don't know how she felt that was possible, as the exposure draft fails both our industry and the consumer public.

We urge the Board to take a hard line stance and require all CFP holders to be held to a fiduciary standard. Allowing an opt -out clause seems to be nothing but a bone thrown to the brokerage world that wants to live under a suitability requirement rather than a fiduciary standard. You have an opportunity to take a position that will result in strengthening our profession, and it appears that you are choosing to go the other direction. If this is being done in order to salvage the relationship with CFP's that happen to work in the brokerage world, we suggest that you reevaluate the priorities. If it is to make it easier to attract new prospective CFP holders that work within the brokerage firms, we ask that you remember that your own Mission Statement states that you are to "help people benefit from competent, professional and ethical financial planning". We suggest that competent, professional and ethical financial planning is most definitely not being practiced at many of the brokerage firms. The public would be better served if those that eschew a fiduciary standard were stripped of the marks, or were not allowed to obtain them in the first place. For those "brokers" that want to practice in a competent, professional and ethical manner, perhaps this approach would force them to relocate their practice to an environment where fiduciary standards were accepted willingly.

You have stated that the CFP mark should be seen as the gold standard of the industry. Please rethink this important issue, and rule that all those that hold the mark must be fiduciaries. Anything less is unacceptable, and will lessen the credibility of the mark.

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FREDERIC M. RIZZO, CFP®

Subject: Proposed Changes to Fiduciary Standards

I support the FPA position on Proposed Changes to Fiduciary Standards.

The CFP Board position seems to me like the story attributed to Georg Bernard Shaw. He asked a lady of the court if she would sleep with him for 100 pounds and she said, yes. He then asked her if she would sleep with him for 5 pounds? She said, no, `what do you do you think I am ?` He answered, "that has already been determined, now we can settle on a price."

When you are a CFP planner, you are a fiduciary. It is not determined by the engagement nor the planner. It also confuses consumers & interested public to do otherwise.

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MARK S. ROBERTSON, CFP®, MBA

Subject: Ethic Code Changes

I am very concerned about the proposed changes to the CFP Code of Ethics and Professional Responsibility. I believe that as written, these changes will weaken the high standards of conduct that we have created in realty and in the minds of the public. I do not support the notion that someone can hold themself to a lower standard simply by putting it in writing. I believe that the public needs us more than ever and they need to know that they can expect the highest standards of conduct.

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JEANNE A. ROBINSON, CFP®

When Stewart Welch and I agreed to chair the Task Force for revision of the Code of Ethics back in 2004, our focus was primarily on clearing up repetitive and conflicting language and in closing loopholes that made the Code and the Standards hard for the Board of Professional Review to apply and enforce. That review, though, raised the question of whether or not full fiduciary language should be made part of the Code.

While I personally believe that Certified Financial Planning practitioners™ should always act in the best interests of their clientele, I recognize the challenges posed by imposing fiduciary standards on some of our certificants, primarily those not engaged in the practice of financial planning.

Typically, a professional Code is comprised of two tiers. The 1st tier contains rules to which all will be held. These rules are specific, concrete and universal. They designate a minimum level of conduct below which one cannot fall without the expectation of disciplinary action. The 2nd tier contains ideals to which all (hopefully) aspire. By effect and by example, these ideals raise the level of the 1st tier.

Our current Code alludes to our aspirations for a fiduciary standard in stating that "a financial planning practitioner shall act in the interest of the client". What is becoming evident now, however, is a thirst to elevate this from mere aspiration to a 1st tier level of conduct.

Your proposed draft does advance our responsibility and thinking with respect to the fiduciary issue, but I believe it stops short of our mission to protect members of the public. If we move to a place where advisors of a fiduciary status and advisors of a non- fiduciary status can hold out under the common label of a CFP®, our marks will, in fact, become common, and the public will cease to trust in the marks.

We need to keep firmly in mind that our Code is not only a guideline for the behavior of our certificants; it is also the public's guide to expectations for our profession.

Where do we want the financial planning profession to be 10, 15, even 20 years from now? What will the public perception be of financial planners, in general? What will be the public perception of the CFP®? What will be our Standards? What will be the criteria for entry into the profession? What will be the process by which we deliver service to our public? What will be our contribution to society at large?

All decisions being made today should, perhaps, be made within the context of these questions.

How will we be educated and what will be the content of that education? What regulatory framework will we operate under? Will the CFP® designation be elevated from a mere trademark position to a true position of prestige in the public eye, where the CFP® denotes advanced learning, high ethics, and service in the best interests of our clientele?

Is some of our difficulty arising because we are putting a CFP® label on folks as a result, primarily, of the educational hurdles they have cleared -- not because they are actually practicing as a financial planner? Looking to the future, perhaps it would be better to receive our education at the college and university level, culminating in a baccalaureate degree in financial planning. Perhaps those interested in the practice of financial planning would then be licensed to so by a credentialing body (that credential possibly being the CFP®). Certainly, once licensed to practice, those practitioners should be held to high fiduciary standards. Those not practicing, those merely educated as financial planners, however, would not need to be held to those same standards.

Did we not face this same issue in attempting to draft Practice Standards that were only applicable to practitioners and not to all certificants?

Perhaps we need to consider whether or not the CFP® designation should be reserved exclusively for practitioners before addressing the issue of whether or not a CFP® should act in the capacity of a fiduciary. Is there really an urgency to take quick action on this issue without further thought and discussion?

I do urge the CFP Board to redraft proposed changes to the Code to accomplish the initial objective of clearing up repetitive and conflicting language and in closing the loopholes that make the Code and the Standards hard to apply and enforce.

I also urge the Board to engage in collaborative discussion with the FPA Board and other interested members of our community to together frame the future of our designation, the future of our profession, and the proper role of a fiduciary in it.

From a timing perspective, however, I urge you to table the finalization of any language with respect to the fiduciary issue until settlement of the FPA's lawsuit against the SEC. In doing so, we present a unified front in promoting what is in the best interests of the public and in the best interests of our profession.

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CORWIN M. ROBISON II, CFP®

Subject: Proposed ethics change

I object to the proposed change in the way that it would impact my practice.

I am primarily an Insurance Agent: that is how I came into the profession. I cannot extend fiduciary responsibility and due diligence to the thousands of insurance only clients: they are unable/unwilling to pay for that level of service and frequently unwilling to divulge that level of information. I do maintain the fiduciary standard in the Planner Practice and clearly identify when I am acting as their CFP® and when I am acting as an insurance agent.

HOWEVER, it is impractical to expect us to submit a written "lower standard" with every individual who contacts us in relationship to a potential policy or even to each and every insurance only client -- even those who would trash it unread as more junk mail.

This standard is impractical and will be difficult to accomplish.

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DONALD W. ROORK, CFP®

Subject: Ethics Changes

As the Ethics Officer for the Northwest Ohio Chapter for the Financial Planning Association, I urge you to listen to the detailed comments from the FPA Board of Directors regarding your proposed ethics changes.

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ANTHONY J. ROSSETTI, CFP®

Subject: Propsed changes to Code of Ethics

I have proudly used the CFP® marks in my practice since 1997 when I was formally allowed to do so by the CFP board. I have been actively in the financial services industry since 1996 and run a small fee-only practice based out of FL with a small satellite office in NC. I have seen the proliferation of the CFP® designation over the past 10 years and frankly not in the best way. Specifically, it appears that less than ethical people are acquiring the marks for nothing more than marketing purposes and duping the consumer into thinking they are qualified. I have been saddened by this 10 year trend.

I was hoping you would make it not only harder to get the mark, but also create strict fiduciary and ethical standards to keep second rate product pushers from using the mark for the "wrong" purpose. Big brokerage firms already use millions of dollars of marketing to try to snuff out the small financial planning firms and this does nothing to promote the profession of financial planning or help the consumer. I am opposed to any standard changes that allow the Merrill Lynch, Smith Barney's and Wachovias of the world from using the marks as they please without having to act in a fiduciary capacity. I would like to hope that the standards are so high that only the true professionals want to attain it and are able to hold onto it. Taking some classes and passing a test (no where near as challenging as the bar or CPA test mind you) does not make someone a true CFP® practitioner in my opinion.

Please reconsider your current position in favor of something stricter with less loopholes for the big brokerage houses and B/Ds.

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JOAN K. ROSSI, CFP®

Subject: Fiduciary Standard and the CFP Board Proposed Rules of Conduct

I am writing to express my concerns regarding the proposed Rules of Conduct to replace the Current Practice Standards, specifically the proposed changes to the fiduciary standard for CFPfont style="font-size:8; FONT-FAMILY: Verdana,helvetica,arial; vertical- align:text-top">® practitioners.

Public First - The purpose in standards is ultimately to serve the public. In the twenty years that I have been a practicing CFPfont style="font-size:8; FONT-FAMILY: Verdana,helvetica,arial; vertical-align:text-top">®, my relationships with my clients and professionals including CPAs and attorneys have been enhanced by the CFP Board Code of Ethics and Practice Standards The proposed Rules of Conduct provide an "opt out" from the CFP Board fiduciary standard by allowing CFP practitioners to choose language in their written agreements with their clients allowing alternative standards as "appropriate" based on the services provided. The CFP Board proposing more than one standard will lessen the CFP mark in the eyes of the public.

Instead, any proposed changes by the CFP Board should create higher standards especially when defining the fiduciary responsibility of a CFP practitioner because it is in the best interest of the public. I propose a clear fiduciary standard that the public understands and appreciates because it will state that the CFP practitioner cannot compromise this standard.

We Are A Professional Group - The professions of attorney and certified public accountant (CPA) have emerged into their current status because of these two professions commitment to excellence and their unwillingness to compromise their fiduciary responsibility. In reviewing the proposed changes, I would propose that the CFP Board follow the examples set by these two professions when proposing changes especially if we value the CFP mark.

Process In Proposing Changes - In proposing major changes to the current Practice Standards, it would be appropriate to begin a dialogue with all stakeholders where input regarding the proposed changes occurred over more than a two month response period (July 24, 2006 to September 25, 2006).

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MARK A. RUCCOLO, CFP®

I've been a CFP™ for only few years. However, I can see the respect that the designation gets from the public. With the sweeping changes that you are proposing, I believe that may jeopardize the respect that the designation receives from the public. Plus cause doubt on the designation itself.

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RICHARD SAINT-LAURENT, CFP®

Subject: Proposed revisions draft

What does the draft say about the ethics problem of those certificants who are employees of financial service firms? Does "integrity', "objectivity" and "fairness", among others, have a different meaning for them?

I understand that the Rules of Conduct would apply to all certificants, but while the current "rules" apply to all certificants, there is no specific mention of those securities firm employees in the current rules, nor are these certificant-employees specifically mentioned in the draft. Many of us (and I have canvassed the Massachusetts and Gold Coast FPA chapters) believe that FPA and the CFP Board are "caving" in to the large firms, by failing to address this issue. We believe that this question goes to credibility, as it relates to the "Rules". We suspect a double standard, or perhaps, a lack of enforcement.

We independent certificants in the field, competing with larger service firms, are often witness to the loose ethics of those certificant-employees.

I am a 27-year financial planning veteran, 20 years as a CFP practitioner, and I have seen more shenanigans and ethics violations than those mentioned in the "Rules", and know dozens of certificants who should be tried as felons for securities theft and fraud. In the Summer of 1986, I resigned from IDS Financial Services, because I could not, in good conscience, continue to be associated with a large financial services company that so obviously placed loyalty and fealty to the company before the interests of my clients, while presenting myself to the public as a financial planning practitioner and certificant. (A few years later, I left LPL Financial for the same reason.) I could go on, but you get my message.

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STEVE SANT, CFP®

Subject: Code of Ethics

After almost 30 years in financial services, my experience has been that nine out of ten people don't read what they sign. The one person that may will only read it if it is brief and/or convenient. I don't think that these folks are being negligent...they are simply trusting that the person presenting the material for their approval is acting in their best interest. Think about the last time you got a mortgage for a personal example of this phenomenon. In that case, you probably didn't even trust the escrow officer, you were simply overwhelmed with the legalese. And, if you are reading this, you are amongst the more financially educated. How would someone less sophisticated feel?

If the Code of Ethics is relaxed, and allows some to choose a less-than-fiduciary standard, then only those that have less- than-fiduciary intent will choose that option. It's the old argument "If we outlaw guns, then only criminals will have them". Since folks generally don't read what they sign, then "protecting the public" by making the less-than-fiduciary-inclined disclose their questionable intent in writing will only serve to protect the wolf, not the public. The wolf can just point to the fact that he/she told them up-front about the nature of their relationship, and they agreed to it in writing.

All who hold themselves out to the public as financial advisors or financial planners should be held to the same, the highest, standard.

On a related note:

The alphabet soup of professional designations flaunted by some in our industry as a symbol of their ethics and professionalism is sometimes just smoke and mirrors. Many of these designations can be bought...the cost only in the hundreds of dollars, and a few days of classroom study. Their is a blossoming cottage industry peddling ethics and/or professional credentials. Most of these credentials are practically worthless, and serve only to confuse the public and dilute the value of designations that were obtained through years of concentrated study and practical experience.

The CFP Board and FPA should actively educate the public about the value of the myriad of designations, and the average time that it take to obtain and maintain each designation. Most of them don't even require CE. These cottage designations are another way for the wolf to hide in the guise of sheep.

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TIMOTHY SCANNELL, CPA, CFP®

Subject: Proposed CFP Board Code of Ethics Changes

I agree with the position of the FPA that the adoption of the proposed revisions would weaken - not strengthen - the standards under which CFP certificants provide financial planning services. I am also very concerned about the process used. I don't understand why comments from the public are not posted for review. What harm can be done by having more transparency in the process? I am interested to know what others think about the proposal.

One of my primary concerns is that as written, it would be optional for a financial planning practitioner to act as the CFP Board puts it "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." I agree with the FPA that allowing the duty of care to vary would simply add to the considerable consumer confusion in the marketplace regarding what accountability the CFP Board expects of the certificant to the client.

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MARGERY K. SCHILLER, CFP®

Subject: Fiduciary standard

As a CFP since l984, I am disappointed in the opt out provision in regard to a fiduciary standard for practioners. I urge you to reconsider this approach if we are ever to become a profession similar to accounting, law and medicine. The nature of comprehensive finanical planning warrants this level of community respect and should meet the fiduciary standard at all times. If we are ever to properly educate consumers in finanical matters and allow them to trust the judgement of a CFP as a professional advisor, this is mandatory.

When I began in this business, I opted to charge hourly rates or retainer and always follow a fiduciary standard. While this meant enduring harrassment from my CFP colleagues and sometimes accepting lower earnings from my chosen profession, I have always put client interests first.

Sales professionals should admit they have a different agenda and present themselves to clients as what they really are. If they cannot take pride in their true profession, then it is time to do something else. It is now our job as legitimate service providers to support them in living a lie. Bite the bullet and let's get on our way. I fully support higher license fees and dues if needed to clean house and take a fiducicary stand!

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CRAIG SCHMITH, CFP®, MBA

Subject: CFP Board Code of Ethics Changes

The recent proposed ethics codes changes show that the CFP board considers maximizing the number of CFP certificants to be more important than moving the CFP designation towards being a true profession. Diluting the quality of the CFP brand is not a step in the right direction. This issue is similar to the one the FPA dealt with years ago where they had to choose between maximizing membership or lining up behind the higher standards of requiring the CFP mark. The FPA did the right thing and now it's time for the CFP board to do the same.

Please act in the spirit of stewardship of the CFP mark, and help move the mark and the profession forwards, not backwards.

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KEITH SCHNELLE, CFP®, AIF®

Subject: Code of Ethics

I completely agree with Chair Barnash's comments. It has become apparent during my own review of the proposed changes that the CFP Board has somehow completely watered-down the strength the Code of Ethics currently has. The proposed changes appear to cut both legs out from under the ability to even enforce what Don Trone of Fiduciary Analytics characterizes as an IMPLICIT fiduciary responsibility we ALL have to ALL clients - even if your new proposed changes state we would be able to override that by having a written document that may state otherwise. It almost seems as if your Board may have had "the enemy" (major player(s) from a major wire house(s)) sitting with you around the campfire as these proposed changes were being composed - with them looking over your shoulder whispering in your ear "this is what needs to be said."

You may feel free to contact me if you have any questions. I am dissappointed that our time is being wasted this way.

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KENNETH P. SCHULTZ, CFP®

Subject: Code of Ethics

I am a licensed CFP; however, I do not have my own practice and do not consult with individuals on financial matters. I work in a corporate environment dealing with non-qualified retirement plans. Therefore I am following the changes in the Code of Ethics from afar. I have to say, however, that the proposed changes I see are "watering down" our profession. Everyone dealing in the financial matters of individuals or families should be held to the highest standards possible. Leaving out fiduciary responsibilities from the Code is wrong! I am sorry to see such steps taken and hope that such action will be reversed.

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JERRY SCHWARTZ, CFP®

Subject: standards

I have strong concerns about the standards you have proposed. I don't think you have yet found the right solution or standard. It's my position that ALL CFP certificants must be required to meet the highest standard of professionalism. In my opinion this standard is that we all are fiduciaries. Period. In principal when one holds oneself out as a having earned the CFP(r) designation, one is by definition claiming to be offering an engagement characterized by trust, knowledge and where the client's interest always comes first. This is the essence of being a fiduciary. We all are, whether the current standards and practices and current law characterizing all of us who are engaged in advising, planning or implementing financial plans and investments for clients, recognize it or not.

Doctors, by holding themselves out as "MDs," do not have any option about the application of their oaths while engaged in any aspect of healthcare. When they change the oil in their car they are not laboring as doctors and their oath doesn't apply. However, when they are engaged in ANY activity of healthcare, they MUST be bound by their oath.

CFP certificants cannot have more than one hat. The hat we must wear is the fiduciary hat in all aspects of our work. The current distinctions are based on old concepts and old laws. The CFP Board should be leading us all into the future, not carving out influenced based exceptions that are transparent attempts to codify a double standard, especially simply out of fear that many existing CFP certificants may not be willing or allowed to meet it.

I believe the single fiduciary standard is inevitable. The question is will the CFP(r) mark remain the leader or fall away, as a new designation, expressing a new standard, more in tune with the future, ascends and becomes the designation of choice.

If the Board cannot settle on one higher standard, that all CFP(r) certificants must meet, then let the mark become an educational designation and promote state licensing of financial planner, advisers and brokers.

Thank you for you effort. Keep going. We aren't where we need to be yet.

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KATHLEEN V. SCOTT, CPA, CFP®

RE: Exposure Draft on Code of Ethics

I have been a CPA since 1992 and am accustomed to being expected to act with fiduciary responsibility on behalf of my clients. I worked on the institutional side of the investment business for most of my career since 1975. I have been a personal financial planning only since 2001.

In my transition to working with individual investors, "the public", I chose to work under the CFP® marks. I felt this was the best way to communicate to the public my level of commitment their well-being. It was to communicate my willingness to work in their best interest, period. It was to hold myself out as taking fiduciary responsibility on their behalf. This was one of the aspects, I believed, which set me apart from other practitioners.

Now the Certified Financial Planning Standards Board proposes an 'opt-out' for Certificants. I don't believe this is in the best interest of the public or in the future of the CFP® credential. It will lose some of its appeal and meaning to the public and also to me.

I am confused by the tack being taken by the Board, both in this matter and in its level of cooperation with some constituents, in particular, the Financial Planning Association. I have been an active FPA member because I believe in our mission. I believe the financial planning process, the code of ethics and the associated standards promote the public good. The proposed changes, I believe, do not.

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

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IRA HAMMERMAN ON BEHALF OF THE SECURITIES INDUSTRY ASSOCIATION

Re: Exposure Draft on CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards

The Securities Industry Association [note: The Securities Industry Association ("SIA"), established in 1972 through the merger of the Association of Stock Exchange Firms and the Investment Banker's Association, brings together the shared interests of nearly 600 securities firms to accomplish common goals. SIA member firms are a diverse group, including investment banks, broker-dealers, and mutual fund companies of various sizes and from various geographic regions. SIA member firms are active in all U.S. and foreign markets and in all phases of corporate and public finance. More information about the SIA is available on its home page: www.sia.com.] submits this letter in response to the request for comments by the Certified Financial Planner Board of Standards, Inc. ("CFP Board") on the Exposure Draft. We commend the CFP Board for its efforts to update the Code of Ethics and Professional Responsibility ("Code of Ethics") and Financial Planning Practice Standards ("Rules of Conduct") and we endorse the CFP Board's efforts to bolster ethical and professional standards of CFP certificants ("certificants"). We appreciate the opportunity to comment on the Exposure Draft.

I. Discussion

As you know, employees of SIA member firms make up a significant percentage of current certificants, and many SIA member firms have additional personnel that are in the process of becoming certificants. These certificants offer a wide variety of products and services, and can function in very different ways. Yet each is subject to extensive regulatory oversight and wide ranging firm supervisory practices and procedures. In this context, our comments are intended to assure that the Code of Ethics and Rules of Conduct are constructive and practical, so that they will be beneficial to the investing public and financial services firms will continue to encourage their personnel to become certificants. We have attached as Exhibit A a markup of the Exposure Draft that details changes to the Code of Ethics and Rules of Conduct to achieve that result. We hope that the CFP Board will agree that these changes are fully consistent with its intentions in promulgating the Exposure Draft.

Our comments are directed to two central points related to the scope of the Exposure Draft and specific language of the Exposure Draft. However, as an initial matter, we want to express our agreement with other commenters who have noted that a fiduciary duty of care applies to all financial planning activities. We are concerned about the potential for the Exposure Draft to be interpreted to mean that certificants may opt out of their fiduciary status when providing financial planning or other investment advisory services. Consistent with the application of the federal securities laws, we support a fiduciary standard of care for all investment advisory services including financial planning.

A. The CFP Board Should Consider Applying The Rules Of Conduct Only To Financial Planning Activities By Certificants, Rather Than All Activities By Certificants.

SIA member firms are subject to multiple regulatory regimes, including those administered by the Securities and Exchange Commission ("SEC" or "Commission"), state securities regulators, and the NASD, NYSE, and other self-regulatory organizations ("SROs"). Within this regulatory structure, broker-dealers and other financial services firms operate in a variety of capacities, all of which are closely regulated. The Rules of Conduct as presently drafted would apply to certificants regardless of the capacity in which they are functioning. Thus, a financial services firm that offers stocks, bonds, insurance products, mutual funds, planning services, managed accounts and possibly other services as well would need to assure adherence to the Rules of Conduct by certificants no matter what services they are performing.

A more workable approach would be to apply the Rules of Conduct to financial planning activities by certificants. The CFP Board's website states that its mission "is to help people benefit from competent, professional and ethical financial planning." (Emphasis added.) We understand the CFP Board's concern that, in the past, some certificants may have sought to evade the CFP Board's reach by classifying their activities as something other than financial planning. [note: Exposure Draft Revisions to CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards, available at http://www.cfp.net/Downloads/Overview.pdf.] That problem has now been addressed by the SEC's adoption of Rule 202(a)(11)-1, which removes much of the ambiguity and uncertainty surrounding the meaning of the term "financial planning." The Rule and the guidance thereunder set out guideposts for determining what are and are not financial planning services, and certificants engaged in financial planning now have much less ability to recharacterize their activities as something else. Furthermore, the Rule conclusively established that financial planning activities are governed by the Investment Advisers Act of 1940 and, as a result, the duty of care that applies to all financial planning activities is a fiduciary standard.

The promulgation of Rule 202(a)(11)-1 has prompted SIA member firms to develop enhanced and comprehensive compliance and supervisory structures around their financial planning services and products. Before, or at the time that, financial planning services are provided, broker-dealers and other financial services firms give clients extensive disclosures about the nature of the services and the general obligations and rights that arise from financial planning being an investment advisory activity.

The application of the Rules of Conduct beyond financial planning would require firms yet again to restructure their compliance and supervisory programs to provide customized procedures and supervision for anyone in their firm who holds a CFP designation. Furthermore, this extension to non-financial planning services would result in financial services firms creating separate disclosures, agreements, and supervisory procedures relating to certificants. This undertaking would be extraordinarily disruptive to efforts to assure standardized and uniform supervision of employees, and would provide little benefit to clients and the investing public in light of the enhanced disclosures already being provided under Rule 202(a)(11)-1. Indeed, by compartmentalizing a segment of a firm's professionals (even while others are offering the same financial services) and adding another layer of regulation on an already extensive and comprehensive structure, we are concerned that the Rules of Conduct might increase customer confusion and make it more difficult to obtain financial services.

B. The CFP Board Should Incorporate Clarifying Changes To The Language Of The Exposure Draft.

As noted above, we believe that many of our concerns with the Exposure Draft would be ameliorated if the scope of the proposed changes were limited to financial planning activities. However, regardless of whether the CFP Board so limits the Exposure Draft, we recommend that the CFP Board implement the following changes to clarify what we believe is its underlying intent in publishing the Exposure Draft, namely, to assure that clients receive relevant and meaningful information about the services to be provided. This section should be read in conjunction with the markup that is attached at Exhibit A.

  • Definitions. We recommend that the CFP Board incorporate into the Exposure Draft a definition of "financial planning" or "financial planning services" that is consistent with the SEC's definition of financial planning pursuant to Rule 202(a)(11)-1 and guidance thereunder. We do not believe that it is necessary to have definitions for "financial planning process," "personal financial planning process," "financial planning subject areas," or "personal financial planning subject areas," as these terms do not appear to be used in the Exposure Draft. [note: While these terms appear in the current version of the CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards, we understand that the Exposure Draft would replace both of those documents.] In addition, as written, those definitions conflict with the SEC's financial planning guidance by including within the ambit of financial planning certain activities that the SEC has indicated are not financial planning.
  • Involvement of Certificants' Employers. The Exposure Draft should clarify that, to the extent the Rules of Conduct place requirements upon a certificant to memorialize, retain, disclose, or provide information, or meet other obligations toward a client, the certificant will be deemed to be in compliance if the certificant's employer or a designee of the employer takes action to meet the requirement. [note: The SIA acknowledges that the CFP Board, in preparing the Exposure Draft, was sensitive to the fact that it has disciplinary authority over certificants, but not certificant's employers. The SIA believes that its suggested language is entirely consistent with this premise.] This change will assure that financial services firms can oversee their employees' compliance with the Rules in a consistent and coordinated fashion.
  • Written Agreement Requirement. The Exposure Draft requires certificants to utilize a "binding written agreement" with clients that would cover the services being provided, even when there is no requirement in the law or SRO rules for such contracts. The SIA agrees with the principle that the investing public is better protected if financial services firms and representatives document their relationships with clients, rather than relying only on oral communications. As such, SIA member firms currently memorialize information about client relationships in a variety of written and electronic documents, including account-opening documents, service-specific documents, and periodic disclosures. Given all of these documents and disclosures, we do not believe that another set of client contracts would enhance the customer experience or meaningfully augment the customer's knowledge and understanding. The SIA respectfully requests that the CFP Board permit "a writing" rather than a "binding written agreement." This change would allow SIA member firms to implement and coordinate appropriate explanations and disclosures through the use of the various existing written disclosures and documents.
  • Duty of Care. The SIA recommends that the CFP Board clarify the duty of care that would apply as between financial services firms or certificants and their clients. One possible interpretation of the Exposure Draft is that certificants would have to "opt-out" of a default fiduciary duty of care by putting clients on notice that a fiduciary standard does not apply. Indeed, the current language would also seem, inadvertently, to allow certificants to opt out of a fiduciary standard even if they are offering investment advisory services where such a fiduciary standard does apply. We do not believe that this is the CFP Board's intended result, and therefore we have suggested alternative language. The language would clarify that the duty of care that applies to financial planning is that of a fiduciary, and that the duty of care applicable to non-financial planning activities is determined by disclosures about the obligations and/or rights of the client, the certificant, and/or the firm. In addition, the SIA's clarifying language would make clear that absent such disclosures for non-financial planning activities, the duty of care that would apply would be that of a fiduciary.
  • Disclosure Content. The Exposure Draft would require that certificants make specific types of disclosures to clients, including disclosures about the compensation to be paid by the client and received by the firm, an affiliate, and/or the certificant. We request that the CFP Board clarify that disclosures currently required under applicable SEC or SRO rules, and which are already provided by financial services firms to clients in various documents such as Form ADV, trade confirmations, and customer account statements, would meet these requirements.
  • Disclosure Form. Finally, we note that the Exposure Draft establishes an expectation that the certificant will provide certain oral disclosures to clients in advance of providing services. As has been highlighted during the debate over a proposed SEC Rule that would require mutual fund point of sale disclosure,5 it is virtually impossible for financial services firms to supervise conversations or the content of oral disclosures by individual representatives. Therefore, we suggest that the CFP Board allow certificants and or certificant's employers to comply with disclosure obligations by providing oral or written disclosures.

We appreciate the opportunity to comment on the Exposure Draft and respectfully request that the CFP Board consider the recommendations set forth above and in the attached document. We are willing to meet and discuss these matters with the CFP Board and/or its staff and to respond to any questions that you may have.

Read Exhibit A, SIA's Markup of Exposure Draft, in pdf format.

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JAMES SEIFERT, CFP®

Subject: Comment Regarding Standards

As a newly certificated CFP I am concerned in the extreme that the time, energy, expense and dedication I have expended to achieve what has been described as an "industry credential" is in serious danger of being taken away simply because I hold a Series 7 license and am employed by a broker - dealer. By including the "fiduciary" standard in the language the CFP board is attempting to force its certificants to choose whether to be registered representatives of a broker-dealer or not. Most, if not all broker-dealers (particularly the top 20, possibly even the top 50 b-ds) will likely not allow their employees who hold the CFP designation to continue to use the mark in any professional capacity. This is absolutely not in the best interests of the public who have come to depend upon the CFP mark as a sign of expanded education and knowledge. The effect of requiring the fiduciary standard will force all CFP certificants to drop their Series 7 license or give up their CFP designation. Likely these certficants will drop their CFP rather than force or expect their clients to switch from the B-D they currently are associated with. This is hardly in the interests of the client being served by a CFP working for a B-D, or for the CFP themselves.

This crossfire between B-D's and the rabid "fee only" crowd is being forced on the CFP Board and in the same way PETA, Greenpeace or even fanatic religious organizations attempt to force their narrow view on a public who's knowledge of the problem is limited to "sound bites" offered through the media.

I'm shocked, saddened and bewildered by the CFP Board's ruthless abandonment of a very large segment of their certificants. I do not pretend to be an expert on this issue, but I am almost positive that by far the vast majority of the general public in this nation who work with a professional advisor work with an advisor who holds a Series 7 license. For the CFP board to walk away from any pretense of trying to serve this segment of the public, merely to appease a small group of vocal protesters - who take great delight in fighting a perceived Goliath (the large broker dealers) is short sighted and completely at odds with the board's own wish to be an advocate for the public in establishing standards.

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JOHN D. SEITZER, CFP®, CFA, CPA

Subject: comments regarding the exposure draft

Here are my comments regarding your exposure draft:

It would be nice if the CFP mark stood for more than just academic accomplishment. It would be nice if it were more of a professional designation. When you are telling the public they have to read the fine print (which they won't) to really determine whether the CFP practitioner is on their side you are really doing little to instill trust in the public of CFPs.

Speaking for myself, the longer a contract is, the more clauses that include "except" and "but", the more guarded I am in dealing with that individual and profession. Let's face it, people don't read the fine print and if they do, they often don't understand it. It is up to us to set the standard for the industry.

Maybe the answer is that the CFP mark should just stand for academic achievement and some other entity should be responsible for setting professional standards. Our profession owes it to the public to pledge that we'll act in their best interest at all times and that we'll disclose all conflicts of interest, if any. As it stands now, the public does not understand the difference between RIAs and broker reps. If the CFP Board is not interested in setting a standard that the public deserves then maybe the CFP mark should just be an academic designation, so the public is not misled into thinking it stands for more than that.

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DANIEL D. SHEEHAN, CFP®

Subject: CFP Board Proposed Rule Changes

I am writing in response to the CFP Board propsed rule changes, which to a great measure I disagree. The manner in which it is being handled and the scope of the proposals are not in the best interest of the public and the proposed rule changes should be redrafted. My major concerns are as follows:

1. I believe that responses should be accepted until Friday, December 1, 2006 to allow for an open discussion of such important issues and not require practictioners to review and respond while many may be vacationing.

2. I believe that all CFP practictioners should be held to the same standard in working with the public, as we all know that disclosurers can be buried in a lot of legal language that a client may not have the inclination to read or expertise to discern.

3. I believe that the CFP Board should publish all responses received, so that there is an openness to this most important discussion.

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JAMES SHUMWAY, CFP®

Subject: Code of Ethics

CFP Board: Please DO NOT allow certificants to sidestep the role of a fiduciary! To me it seems ironic that you are trying to change this "Ethics" issue because of money. --I understand that almost half of our (I say "our" because you have succeded in ingendering this kind of link with the designation thus far) certificants are brokers. Regardless of what you say, this smacks of pandering to those designess as a way to hold on to them!

Please stay the course. Stay strong. Do not be swayed.

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JAMES D. SMITH, CFP®

I am in agreement with the letter from FPA NJ dated Set 22,2006. Please consider the response. Thanks

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TIMOTHY L. SMITH, CFP®

Subject: Proposed ethics code

My concern on this is that the CFP organization is moving toward a fee-only approach. Can you please tell me what the obligations of a CFP under the proposed ethics code would be if he or she works in a fee-plus-commission business model?

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MICHAEL SNOWDON, CFP®

Subject: Comments on COE Exposure Draft

First, I am pleased that CFP Board is revisiting the Code of Ethics. In order to be viable as a profession, financial planning needs to be governed by a living document. I am also pleased to see the attempt at simplification. On the whole, the document appears to do a good job for the profession as well as for the public. However, I have a few concerns, identified below. Please feel free to contact me with questions or for further discussion. Thank you.

CHANGES TO COE

INTRODUCTION/TERMINOLOGY

  1. Rules of Conduct now apply to all certificants. Therefore, they would presumably relate to employer-employee relationships.
  2. Client denotes any person . . . or entity who engages a certificant and for whom professional services are rendered for compensation. Again as a practical matter, this would include employer-employee relationships.

Impact: It is not unreasonable to assume that employment contracts will now have to include language specifying that employees are not operating under a fiduciary standard. This will impact potentially professors, back-office employees at mutual fund firms and any others who may hold the CFP designation.

RULES OF CONDUCT

1.1e.
Given the definition of fiduciary included in the revisions (i.e., "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 interest of the client"), why would you not make it a mandatory standard for any certificant in a financial planning arrangement? Not doing so seems to be a significant step backward rather than forward.

I strongly support making the fiduciary standard mandatory in all financial planning engagements. Specifying financial planning engagements as functioning under a fiduciary standard seems more appropriate than leaving it ambiguous because some certificants provide services outside of financial planning engagements.

CFP Board has come out against the Broker-Dealer exception in the Investment Advisor Act. Why bother? If all a certificant has to do is state in a contract that he or she is not acting as a fiduciary, the Broker-Dealer exception controversy is essentially rendered moot.

1.2a.
This apparent restatement of the Practice Standards seems to seriously diminish the their significance. I applaud the attempt at simplification. However, in terms of benefiting the public, the Practice Standards should be expanded rather than removed.

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COLLEEN SOARES, CPA, CFP®

Subject: Comments on Exposure Draft Revision of Ethical Standards

Following are my comments regarding the proposed revisions to the Code of Ethics and Professional Responsibility and Financial Planning Practice Standards:

  1. I generally disagree with, and don't understand the reason for, the wholesale change in numbering and the change from current Practice Standards to Code of Conduct. It makes it very difficult to determine what exactly is being changed. So, if my comments are not on point, I apologize and must blame it on my confusion in trying to compare the old with the new. I am bothered that this is being made so difficult to determine what is being changed; it's quite likely that I have missed some proposed changes with which I would disagree if it were presented more clearly.
     
    In general I disagree with most of the changes that appear to reduce our professional standards, or give brokers leeway to present themselves as financial planners without exercising the level of care and professionalism that the rest of us exercise, or without having to go through the RIA registration that is required of the rest of us. I believe we cannot reduce our professional standards and expect to taken seriously as a profession.
  2. My biggest disagreement is with Proposed Code of Conduct 1.1.e and 1.2.e. I strongly believe that certificants should not be allowed to contract away thier fiduciary duty of care. This is fundamental to what we do. I don't udnerstand the reason for this.
  3. For the same reason, I disagree with the removal of Rule 202. I don't understand the reasoning for this.
  4. I disgaree with the elimination of the part of Rule 301 that requires that certificants stay informed. Just taking continuing education does not guarantee that they are informed.
  5. Regarding Rule 2.2(a)i, I disagree with the addition "as required by regulatory rules governing the engagement." This would appear to allow brokers to use a different and lower standard.
  6. I disagree with Rule 409 being replaced by Code of Conduct 4 which addresses only Borrowing and Lending; it doess't address other potential transactions with clients.
  7. I disagree with the removal of Rule 608.
  8. I don't understand why CFP certificants should include individuals who have relinquished their certification.
  9. I don't understand the reasoning for changing the definition of fee-only. It is a bit more vagues and so could allow some current non-fee-only to claim they are fee-only.

Sorry to be so disagreeable. Thank you for listending to me. I am hopeful that other certificants will have similar comments and that a revised version of the Exposure Draft will reflect these changes.

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NEAL J. SOLOMON, CFP®, CLU, ChFC

Subject: Comments to CFP Board on Proposed Revisions to Standards

Thank you for requesting public comments on the proposed revisions to the CFP Board's Code of Ethics and Professional Responsibility and to the Financial Planning Practice Standards. The comments below are my own, and are not necessarily the views of any organization with whom I may be associated.

I fully recognize the many challenges faced by CFP Board in its efforts to promote the CFP® mark, meet its duties to serve the public, and to satisfy the diverse community of CFP® certificants. At first examination, meeting these sometimes apparently contradictory interests may seem impossible. Having given the issues involved a great deal of thought, I don't believe that these interests are incompatible at all, and I believe that an appropriate mechanism may be found.

The proposed revisions, the product of no doubt countless hours of volunteer and staff time and commitment - is very much appreciated. While many will sit on the sidelines and express opinions about what they like and don't like in the proposed standards, CFP Board is to be commended for attempting to find improvements. In offering my comments, and I hope some helpful ideas for future revisions and improvements to CFP Boards processes, I'd like to begin by offering a sincere note of appreciation for CFP Boards efforts to bring the project