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Practice Standards 500

Implementing the Financial Planning Recommendation(s):

500-1: Agreeing on Implementation Responsibilities

The financial planning practitioner and the client shall mutually agree on the implementation responsibilities consistent with the scope of the engagement.

Explanation of this Practice Standard

The client is responsible for accepting or rejecting recommendations and for retaining and/or delegating implementation responsibilities. The financial planning practitioner and the client shall mutually agree on the services, if any, to be provided by the practitioner. The scope of the engagement, as originally defined, may need to be modified.

The practitioner's responsibilities may include, but are not limited to the following:

  • Identifying activities necessary for implementation;
  • Determining division of activities between the practitioner and the client;
  • Referring to other professionals;
  • Coordinating with other professionals;
  • Sharing of information as authorized; and
  • Selecting and securing products and/or services.

If there are conflicts of interest, sources of compensation or material relationships with other professionals or advisers that have not been previously disclosed, such conflicts, sources or relationships shall be disclosed at this time.

When referring the client to other professionals or advisers, the financial planning practitioner shall indicate the basis on which the practitioner believes the other professional or adviser may be qualified.

If the practitioner is engaged by the client to provide only implementation activities, the scope of the engagement shall be mutually defined, orally or in writing, in accordance with Practice Standard 100-1. This scope may include such matters as the extent to which the practitioner will rely on information, analysis or recommendations provided by others.

Effective Date

January 1, 2002.

Relationship of this Practice Standard to CFP Board's Code of Ethics and Rules of Conduct

This Practice Standard relates to CFP Board's Code of Ethics and Rules of Conduct through Principle 3 - Competence, Principle 4 - Fairness, Principle 6 - Professionalism, Principle 7 - Diligence and Rule 1.2, 2.2, 4.1, and 4.4.

500-2: Selecting Products and Services for Implementation

The financial planning practitioner shall select appropriate products and services that are consistent with the client's goals, needs and priorities.

Explanation of this Practice Standard

The financial planning practitioner shall investigate products or services that reasonably address the client's needs. The products or services selected to implement the recommendation(s) must be suitable to the client's financial situation and consistent with the client's goals, needs and priorities.

The financial planning practitioner uses professional judgment in selecting the products and services that are in the client's interest. Professional judgment incorporates both qualitative and quantitative information.

Products and services selected by the practitioner may differ from those of other practitioners or advisers.

More than one product or service may exist that can reasonably meet the client's goals, needs and priorities.

The practitioner shall make all disclosures required by applicable regulations.

Effective Date

January 1, 2002.

Relationship of this Practice Standard to CFP Board's Code of Ethics and Rules of Conduct

This Practice Standard relates to CFP Board's Code of Ethics and Rules of Conduct through Principle 2 - Objectivity, Principle 4 - Fairness, Principle 6 - Professionalism, Principle 7 - Diligence and Rules 1.2, 1.4, 2.2, 4.1, 4.4 and 4.5.

Anticipated Impact of these Practice Standards

Upon the Public

The public is served when the appropriate products and services are used to implement recommendations; thus increasing the likelihood that the client's goals will be achieved.

Upon the Financial Planning Profession

Over time, implementing recommendations using appropriate products and services for the client increases the credibility of the profession in the eyes of the public.

Upon the Financial Planning Practitioner

It is for the long-term benefit of the practitioner to put the interest of the client before that of others in the selection of products and services.

Next: Practice Standards Series 600 >

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