The Certified Financial Planner (CFP) Board of Standards put several years of effort into revising its Code of Ethics and Standards of Conduct. It is now trying to provide guidance for CFP professionals to live up to those standards.
“The process of updating our standards went on for several years and we were explicit with our staff [during that time] that we wanted to make sure we were providing the information CFP professionals needed to comply,” Kevin R. Keller, CEO of the board, said during an interview Friday. “We know the most important thing we can do is set and enforce our standards, but we have also always had a priority of helping [professionals] comply.”
In order to provide that assistance, the board, through its Standards Resource Commission, has created resources for CFP advisors that explain the code and standards and give examples of potential situations advisors could face. The resources include multiple-choice solutions to problems an advisor might need to act on and animated videos that illustrate various scenarios.
“I am most proud of the sheer quantity and quality of the guidance we have provided,” Keller said. “I think we compare favorably with any of the regulatory organizations on providing guidance [to meeting the requirements.] People learn in different ways so we tried to present information in different styles.”
The resources, videos and a roadmap, among other postings, are available here. A group of check lists, including what to do to meet the fiduciary standard, are available also available on the board's website.
Leo Rydzewski, the CFP Board’s general counsel, said, “We have gotten great feedback from CFP professionals to the guidance we have provided. We covered a lot of areas and the commission is continuing to work” to create additional content.
The creation of the guidance resources was “informed by our communications with the public and with CFP professionals through a series of forums as well as surveys to determine what they want to see,” Keller said.
The most frequently visited pages include a road map to the code and standards, the seven steps of the financial planning process, the duties owed to clients and a comparison of the CFP Board’s code and standards to the SEC’s Reg BI.
The road map is a short graphic that walks CFP professionals through the main elements of the code and standards. A video explanation of the road map is included.
Approximately 30 case studies are presented that describe the standard that applies to each situation. Each gives three choices for a solution, says which is best and explains why.
The checklists include actions that should be taken to fulfill duties to clients, how to be a fiduciary and how to determine if a situation is a financial planning engagement, among others.
The board began enforcement of the new code and standards in June. “The cornerstone of the new code and standards is a CFP professional’s obligation to act as a fiduciary, and therefore, act in the best interests of the client at all times when providing financial advice. This is a significant strengthening of the prior standard, which required a CFP professional to act as a fiduciary only when providing financial planning,” the board’s website says.