CFP Board Releases Draft Revised Code of Ethics and Standards of Conduct

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CFP Board Releases Draft Revised Code of Ethics and Standards of Conduct

Jun 20, 2017

Opens 60-Day Comment Period

Certified Financial Planner Board of Standards, Inc. today issued a request for public comment on proposed revisions to its Standards of Professional Conduct, which set forth the ethical standards for CFP® professionals.

The draft revision, titled Code of Ethics and Standards of Conduct, broadens the application of the fiduciary standard – effectively requiring CFP® professionals to put a client’s interest first at all times – and enhances and updates standards related to financial planning. 

The 60-day comment period begins Tuesday, June 20, 2017 and ends Monday, August 21, 2017. The public can read the proposed Standards in both clean and annotated formats, watch a video about the changes, and share comments on CFP Board’s website at www.CFP.net/proposed-standards.  

CFP Board’s Board of Directors will consider the feedback received during the comment period.  The final revised Standards will be announced at a later date along with an effective date for implementation. 

Background

In order for individuals to receive CFP® certification from CFP Board, they must agree to the high standards for competency and ethics that are set forth in the Standards. CFP Board periodically reviews the Standards to maintain the value, integrity and relevance of the CFP® certification. The current version of the Standards has been effective since January 2009.

CFP Board announced the formation of a Commission on Standards in December 2015 for the purpose of reviewing and recommending to the Board of Directors proposed changes to the Terminology, Code of Ethics and Professional Responsibility, Rules of Conduct, and Financial Planning Practice Standards sections of the Standards. After receiving feedback during a series of public forums and holding discussions with interested organizations and individuals, the Commission developed recommendations that are incorporated in the proposed revised Standards, which the Board of Directors has approved for public comment. The revisions strengthen the Standards, for the benefit of the public.

Highlights of Proposed Changes 

  • A broader fiduciary standard requires CFP® professionals to act in the best interest of the client at all times
    • Extends a CFP® professional’s obligation to act as a fiduciary, and therefore, in the best interest of the client, when providing financial advice to a client. Under the current Standards, CFP® professionals are required to act as a fiduciary when providing financial planning. 
    • Since the definition of financial advice is broader than the definition of financial planning, the draft revised Standards expands the commitment that all CFP® professionals make to acting in their client’s best interest.
  • A shorter definition of financial planning and a presumption that financial planning is required
    • Presents a new definition of financial planning that is intended to be brief and comprehensive. Financial planning is defined as “a collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances.” 
    • The revised Standards sets forth a presumption that CFP® professionals are required to provide financial planning when providing financial advice, while also outlining the factors CFP Board will weigh in determining whether financial planning is required. 
  • More specific Practice Standards for the delivery of financial planning
    • Updates the Practice Standards, presenting them efficiently, with the financial planning process beginning after the engagement has been formed and with goals selected after the CFP® professional has developed an understanding of the client’s personal and financial circumstances. 
  • Revised process for addressing bankruptcies
    • Includes bankruptcies among the types of adverse conduct to be handled through the disciplinary process, thereby returning CFP Board to the process that was in place prior to 2012.
  • A consolidated, easier-to-read document for the public and CFP® professionals
    • Consolidates four sections of the current Standards in a single document.  Following a brief Preamble, the Code of Ethics announces ethical principles, the Standards of Conduct sets forth specific standards governing the conduct of CFP® professionals, and a Glossary defines key terms.
    • The Standards of Conduct is organized into five discrete sections, one of which sets forth the Practice Standards for the financial planning process. 

How to Comment

CFP Board requests comments on the proposed revised Code and Standards. Comments may be submitted by email to comments@cfpboard.org or through the online form accessible at www.CFP.net/proposed-standards.

CFP Board also invites the public, CFP® professionals and other interested parties to participate in public forums to review and discuss the proposed revised Standards. Public forums are scheduled between July 24 and July 27 in the eight cities listed below. Complimentary registration is available at www.CFP.net/proposed-standards.

July 24

8:00 - 10:00 a.m.

Tampa

Renaissance Tampa International Plaza

July 24

4:30 - 6:30 p.m.

Atlanta

Westin Buckhead

July 25

8:00 - 10:00 a.m.

New York

Westin New York Grand Central

July 25

4:30 - 6:30 p.m.

Detroit

Sheraton

July 26

8:00 - 10:00 a.m.

St. Louis

Sheraton Clayton Plaza Hotel

July 26

5:00 -7:00 p.m.

Dallas

The Westin Galleria

July 27

8:00 - 10:00 a.m.

Phoenix

Hyatt Regency Scottsdale at Gainey Ranch

July 27

5:00 -7:00 p.m.

San Diego

Marriott Marquis San Diego Marina

 

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® professionals 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 77,000 individuals to use these marks in the U.S.

CONTACT: Dan Drummond, Director of Communications P: 202-379-2252 M: 202-243-8621 E: ddrummond@cfpboard.org Twitter: @cfpboardmedia

Speaker's Bureau
CFP Board’s leadership and representatives are available for interviews and speaking engagements on personal finance, the financial planning profession, CFP Board and the CFP® designation.

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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