In its first effort to revisit practice standards in nearly a decade, the Certified Financial Planner Board of Standards Inc. is forming a commission to review its standards of professional conduct.
The 13-member commission will be chaired by former CFP Board chair Ray Ferrara. It includes a broad spectrum of financial services professionals, from mid-size fee-only advisors to executives from Bank of America Merrill Lynch, Vanguard and Northwestern Mutual.
The last time that practice standards for CFP licensees were proposed was in 2002. They were not enacted until 2007. Although CFP Board officials say the commission can take as long as it needs, they voiced optimism that the process would take far less than five years this time around.
CFP Board chair Rich Rojeck and CEO Kevin Keller both said there is no single issue, abuse or other development prompting the board to form the commission at present. Instead, Rojeck noted that “practice models evolve over time” and it was time to re-examine standards.
Both men acknowledged the commission would take into account the evolving regulatory environment, including the U.S. Department of Labor’s proposed fiduciary rule, which the CFP Board has supported with certain caveats. They also expect the Securities and Exchange Commission to start focusing on the fiduciary requirements spelled out in the Dodd-Frank Act.
Since 2007, the number of CFP licensees has increased 33% and the CFP universe has dramatically expanded in certain areas of financial services. For example, the financial planning profession has focused intensely on the growth of robo advisors over the last year but an area where the number of CFP licensees has proliferated at a much fast rate is at Vanguard’s call centers.
Starting in January, the commission will hold a series of nine public forums across the nation. After that, it will meet to review comments from the public and start the process of determining what recommendations to consider.