Eight major brokerage firms have signed on to a letter asking the CFP Board to delay its “best-interest” standards to allow the Securities and Exchange Commission to finalize its own standards first
Firms signing on to the request for a delay include: Ameriprise Financial Services Inc., AXA Advisors, Edward Jones, LPL Financial, Morgan Stanley Wealth Management, RBC Wealth Management US, UBS Financial and Wells Fargo Advisors.
The “CFP Board should defer finalization of the standards of conduct and should align them with the SEC’s proposal,” the eight firms said in their comment letter.
Cumulatively, these broker-dealers and wirehouses work with 18,200 of the 80,000 CFPs the proposed Code of Standards would impact. The proposed standard would require CFP license holders to act in their clients’ “best interest” when delivering financial advice.
At the heart of the matter appears to be the brokerage industry’s unabashed push to exclude commissioned product sales from fiduciary and best-interest standards.
The result of the proposal is “impractical burdens placed on our business models,” the group of B-Ds said, adding that the board’s requirements are broader than regulatory standards and add supervision and liability risks for regulated firms.
Make It Narrow
If the CFP Board won’t delay the rule, the eight firms are asking the board to apply it only to narrowly defined financial planning, in order to ensure that commissioned-based sales are excluded from best-interest standards. They are also asking that the board modify its rules when the SEC finalizes its own.
In stark contrast, registered investment advisory firms and CFPs are largely supportive of the expansive best-interest proposal from the CFP Board.
“If true financial planners had waited for government to raise standards, we wouldn’t be using ‘financial planning’ and ‘profession’ in the same sentence today,” said Dan Moisand, a former president of the Financial Planning Association and principal of Florida-based advisory firm Moisand Fitzgerald Tamayo, LLC.