CFP Board’s revised Standards of Professional Conduct introduces several new phrases and terms to the ethical rules for CFP® professionals. One of the most important of those phrases is “material elements of the financial planning process,” which appears at four key places in the Rules of Conduct (Rules 1.2, 1.3, 1.4 and 2.2). It’s a pivotal phrase that determines the terms of the client engagement that must be put in writing, the disclosures that must be made to a client in writing, and the duty of care that a CFP® professional owes to a client. Read more

Financial planning places great emphasis on the importance of goal achievement, and it’s no surprise that many believe the most important parts of the financial planning process are implementation and results. Those experienced with the financial planning process, however, know that the best outcomes can’t be reached without careful attention to the early steps of the process. Those early steps may in fact be the most important. Initial meetings may also be the most important time for a CFP® professional to embody the high ethical standards represented by CFP® certification. CFP Board’s revised Standards of Professional Conduct includes many ethical standards that apply to contact with prospective clients. Read more

The principle of fairness is an important one for CFP Board’s ethical standards, and CFP Board’s revised Standards of Professional Conduct contains several rules designed to give clients a fair chance to understand clearly the services they can expect to receive and the context in which they’ll receive those services. Two important rules from the new Rules of Conduct describe required disclosures to clients and prospective clients that help them better make informed decisions about the recommendations they may receive. Read more

Much of the information shared between a CFP® professional and client in the early stages of the financial planning process is likely to take place through conversation, but it is important to memorialize vital pieces of that information in writing. Written documentation helps ensure that both client and planner have a similar understanding of key aspects of the client engagement. CFP Board’s ethical standards have long required that certain disclosures be made to financial planning clients in writing, and CFP Board’s revised Standards of Professional Conduct adds a new requirement that a written agreement accompany any financial planning services or services that include material elements of the financial planning process. Read more

Disclosure of compensation and costs is an important part of CFP Board’s ethical standards for CFP® professionals, regardless of the type of compensation a CFP® professional receives or the type of services offered to clients. CFP Board’s revised Standards of Professional Conduct provides guidance on the type of compensation disclosure CFP® professionals are required to make to clients and prospective clients. Read more

CFP Board’s revised Standards of Professional Conduct sets forth the ethical standards that those who hold CFP® certification are expected to uphold. While CFP Board’s ethical standards focus primarily on individual CFP® professionals and the obligations they have to their clients, the updated Standards also recognizes that CFP® professionals may receive assistance from employers and principals in meeting their ethical obligations. Certificants also have ethical obligations to their employers and principals. Read more

CFP Board’s revised Standards of Professional Conduct naturally focuses on the obligations that individual CFP® professionals have toward their clients. The updated Standards also describe certain obligations certificants hold to their employers and principals and obligations certificants have to CFP Board. The final section of the Rules of Conduct sets forth five Rules that describe a certificant’s obligations to CFP Board. Read more

CFP Board’s revised Standards of Professional Conduct introduces new duty of care standards for CFP® professionals. Rule 1.4 of the new Rules of Conduct requires that a CFP® professional “shall at all times place the interest of the client ahead of his or her own.” That same rule requires CFP® professionals who provide financial planning services or material elements of the financial planning process to do so with the “duty of care of a fiduciary,” defined as “one who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client.” Acting in a client’s best interest requires a CFP® professional to understand the individual client’s goals, needs and current financial situation, to make recommendations based on the best available options, and to exercise professional judgment in determining the best of those options. Read more

Competence is one of seven principles for CFP® certificants. In CFP Board’s revised Standards of Professional Conduct, Rule 2.4 of the Rules of Conduct states, “A certificant shall offer advice only in those areas in which he or she is competent to do so.” CFP Board’s revised Standards also require CFP® certificants to be aware of the competence of other individuals to whom client services may be delegated or referred, including subordinates and third parties, and to provide prudent supervision or direction to those individuals. Read more