CFP Board Urges Better Disclosures, Clearer Language for Investors

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CFP Board Urges Better Disclosures, Clearer Language for Investors

Mar 26, 2012

Encourages Reforms to Better Educate the Investing Public

March 26, 2012 – Investors need simpler, easier to understand disclosures that are written in plain English and are provided before the investor hires a financial intermediary, Certified Financial Planner Board of Standards, Inc. recommended in a letter sent to the Securities and Exchange Commission in connection with the SEC’s study on financial literacy among investors.

“We believe that investor education, including timely and effective disclosures, is important to the protection of investors, regardless of who is providing the advice,” wrote CFP Board Chief Executive Officer Kevin Keller, CAE. “The additional disclosure requirements we recommend, many of which are currently embraced by CFP® professionals under our Standards of Professional Conduct, will help investors make key financial decisions including what type of advisor is best suited for them. Additional disclosures alone are not enough to protect investors and build confidence in our capital markets. That is why we will continue to urge the SEC to adopt a uniform fiduciary standard of care applicable to all who provide personalized investment advice to investors.”

In the letter sent to the SEC, which can be viewed here, CFP Board recommended among other things:

  • Requiring disclosures in four focused areas: conflicts of interests (including a financial intermediary’s standard of care), fees and costs, background of the financial intermediary and scope of representation;
  • Requiring that the recommended disclosures be made prior to the engagement of a financial intermediary (i.e., financial advisor, financial planner, broker-dealer); and
  • Requiring all disclosures be written in plain English, be provided in writing and be made available electronically.

Keller noted that a recent survey by CFP Board showed more than two-thirds (67 percent) of all Americans believe that they are solely responsible for their own financial security, including retirement. At the same time, 67 percent of survey respondents also agree that the government has a role in protecting investors from fraud and abuse.

“This indicates to us that enhanced investor protections and better information is needed for the individual investor,” said Keller.

ABOUT CFP BOARD: 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 competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board's mission, acts on behalf of the public, CFP® certificants and other stakeholders. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and 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 65,000 individuals to use these marks in the United States.

Dan Drummond, Director of Public Relations
P: 202-379-2252
M: 202-550-4372
Twitter: @CFPBoardmedia

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Did You Know?

Among clients who work with an advisor, 87% of those working with a CFP® professional are satisfied or very satisfied, compared with 72% of those who work with an advisor without certification.
Anyone can call themselves a “financial planner.” Only professionals who meet CFP Board’s rigorous standards can call themselves CERTIFIED FINANCIAL PLANNER™ professionals.
The 2013 Household Financial Planning Survey shows that those with a financial plan feel more confident and report more success managing money, savings and investments than those without a plan.
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