The Certified Financial Planner Board of Standards has approved its new Code of Ethics and Standards of Conduct, significantly expanding the scope of fiduciary duty that will be expected of the 80,000 CFP professionals it certifies.

The new code, approved unanimously by the organization’s board of directors, will go into effect on October 1, 2019.

“CFP Board took a bold step more than a decade ago in requiring a fiduciary duty when CFP professionals provide financial planning services,” CFP Board Chairman Richard Salmen, CFP, told reporters during a press conference on Wednesday. “We are raising that bar even higher now with a fiduciary standard that will apply any time a CFP professional gives advice.”

By requiring that a CFP professional act as a fiduciary at all times -- as opposed to the old code which mandated it only when delivering a financial plan -- “we are eliminating any confusion,” Salmen said. Specifically the new code requires: “At all times when providing financial advice to a client, a CFP professional must act as a fiduciary, and therefore, act in the best interests of the client.”

That code further requires advisors who use the marks to:

• Place the interests of the client above the interests of the CFP professional and the CFP professional’s firm;

• Avoid conflicts of interest, or fully disclose material conflicts of interest to the client; obtain the client’s informed consent, and properly manage the conflict, and;

• Act without regard to the financial or other interests of the CFP professional, the CFP professional’s firm, or any individual or entity other than the client, which means that a CFP professional acting under a conflict of interest continues to have a duty to act in the best interests of the client and place the client’s interest above the CFP professional’s.

Whether or not the CFP Board’s new standards may dovetail with the Securities and Exchange Commission’s planned “best interest” proposal remains to be seen, but what is certain is that the 16-page document is far more succinct than the 1,000-plus word DOL fiduciary rule that was vacated earlier this month. Salmen said the board saw no reason to wait for the SEC to come up with best interest standards, which SEC Chairman Jay Clayton said the agency will propose this summer.

“We’re not certain the SEC will act in a timely manner,” Salmen said. “We believe the train has left the station on fiduciary rules. It is precisely because we are a standards-setting body that we have created higher standards than what the government requires. These standards are part of the evolution of planning -- good for the public, CFP professionals and firms that employ them. We see no reason to wait.”

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