CFP Board Welcomes SEC Proposal to Enhance Adviser Disclosure

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CFP Board Welcomes SEC Proposal to Enhance Adviser Disclosure

Jun 06, 2008

WASHINGTON, DC –June 6, 2008 – Certified Financial Planner Board of Standards (CFP Board) has filed a comment letter with the U.S. Securities and Exchange Commission (SEC) welcoming its proposal to improve the quality of information that investment advisers must provide to clients and prospective clients.

The public that seeks financial services “will benefit from the enhanced overall disclosure” of conflicts of interest and material information in the proposal to amend Form ADV, Part 2, said Kevin R. Keller, CEO of CFP Board. Form ADV is comprised of two parts – Part I, which provides the SEC with necessary information about the investment adviser, and Part II, which sets forth information required to be disclosed to clients and prospective clients of the investment adviser.

CFP Board’s letter offered strong support for full disclosure of the methods of compensation, noting that CFP Board’s revised Standards of Professional Conduct, which become effective July 1, 2008, strengthen the requirements that CERTIFIED FINANCIAL PLANNER™ certificants must follow in disclosing conflicts of interest and compensation information during the course of their relationship with their clients.

The letter also urged the SEC to consider expanding its requirements for the disclosure of material background information so that advisers would be required to list disciplinary actions taken by state agencies and professional organizations, as well as personal and business bankruptcies and the occurrence of any judgment liens within the previous five years. “The public has the right to know such information when evaluating whether to do business with an investment adviser,” CFP Board said.

CFP Board’s letter also expressed its concern over the use of designations that suggest an adviser has “attained a particular level of skill or ability.”

“The proliferation of credentials, particularly those aimed at elderly or senior investors, has created much confusion and has led to an increase in elder fraud,” Keller said. CFP Board has urged the SEC to consider adopting guidelines for advisers who use designations that are consistent with the guidelines of the Model Rule recently adopted by the North American Securities Administrators Association. Alternatively, CFP Board suggested that advisers who use designations should provide a conspicuous note that the SEC does not endorse, approve or otherwise regulate the designation.

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. CFP Board currently authorizes more than 57,000 individuals to use these marks in the United States.

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Chris Wloszczyna, Director of Public Relations
CFP Board
P: 202-379-2252

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