For CFP® Professionals

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Liability

Look here to learn how CFP Board’s Standards affect your liability.

CFP Board wants all CFP® professionals to have a thorough understanding of the Standards of Professional Conduct. Questions not answered in these FAQs may be sent to standards@cfpboard.org for consideration and possible inclusion in future revisions of this document.

Question 11-1: Do the Standards increase liability for CFP® professionals?

Liability in the financial services business exists regardless of whether one’s services can be considered financial planning. CFP Board believes that compliance with the Standards, including the requirement that financial planning services be provided with the duty of a fiduciary, is a way to reduce liability.

The Standards were developed to be an enforceable set of requirements that CFP Board can apply to those who hold CFP® certification; they are not meant to be used for third party liability. [See Introduction to the Standards] CFP Board nevertheless understands that claimants may attempt to introduce aspects of CFP Board’s Standards in litigation and arbitration proceedings. Just as it would be inappropriate for CFP Board to interpret or enforce rules established by FINRA, the SEC or state regulators, it would be inappropriate for other bodies to interpret or enforce CFP Board’s rules. When CFP Board is made aware of attempts by other bodies to enforce CFP Board’s rules against a CFP® professional, CFP Board can provide the CFP® professional with documentation that explains CFP Board’s jurisdiction over its own rules and affirming that the rules are not meant to create liability to anyone other than CFP Board. Situations like these have occurred in the past with CFP Board’s previous Standards, but CFP Board does not have information showing that any court or arbitration panel has in fact made findings of violations of CFP Board rules.

Consumers seek advice they can trust. They deserve disclosure, competence, professionalism and ethics. Those elements are an integral part of the Standards. CFP Board believes liability is reduced when CFP® professionals and their clients have a clear and mutual understanding of their relationship and the services within that relationship. The Standards include rules designed to enhance that mutual understanding.

CFP Board encourages the public to seek out the services of CFP® professionals from the wide variety of choices they have among financial service providers precisely because CFP® professionals are held to high standards of competence, professionalism and ethics. We are confident that firms and CFP® professionals can and will embrace and develop practices that comply with the Standards. It is the right thing to do for the consumer.

Did This Answer Your Question?

CFP Board welcomes questions about specific aspects of the Standards of Professional Conduct and their application to specific situations.

CFP Board will consider all questions submitted and draft a response where it determines that interpretation of the Standards is needed.  For responses that it believes would be helpful to all CFP® professionals, CFP Board will publish its response in CFP Board’s newsletters and on CFP Board’s website.

Send your questions and requests for guidance documents to CFP Board at standards@cfpboard.org.

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