The Financial Planning Association (FPA) has stepped up its opposition to the CFP Board's proposed ethics code changes, with FPA President Daniel B. Moisand stating the new rules would "weaken, not strengthen, consumer protections."
In comments submitted to the CFP Board of Standards earlier this week, Moisand called for the withdrawal of the proposal, which the CFP released after a three-year internal review.
"The changes have the potential to adversely affect an estimated 5 million clients of CFP certificants in the U.S. and potentially millions of future clients," Moisand stated in the 8-page commentary. "Protecting the public should be of utmost concern."
The CFP mark is considered the "gold standard" of certificates available to practicing financial advisors. About 51,000 advisors hold the mark.
Much of the criticism against the CFP Board's proposed rule changes centers on the way the CFP treats the fiduciary responsibility-the obligation to put a client's interests first-of CFP certificants. Under the proposal, holders of CFP marks would be able to opt out of a fiduciary responsibility so long as they clearly define their role to clients.
The FPA and other critics argue that a fiduciary standard should be inextricably tied to the CFP mark. In the comment letter, Moisand argued that making the fiduciary standard optional would confuse consumers and undermine the CFP's stated mission of promoting "uniform" standards within the profession.
"The practical result will be greatly varying standards of conduct for CFP certificants-not a universal strengthening of standards as the CFP Board suggests," he wrote.
The CFP Board, however, says the fiduciary standard needs to be optional for cases where it is not applicable, such as when educators hold the CFP mark.
Moisand also criticized the way in which the rule proposals were created, stating the process lacked transparency and was conducted "behind closed doors."
Other concerns cited by the FPA include: