A second month-long comment period will accompany the newly revised proposed standards, lasting from Jan. 2 through Feb. 2. Aikin believes that the new standards will be finalized before the end of the first quarter of 2018, and become effective on Jan. 1, 2019.
Ira Hammerman, Sifma’s general counsel, expressed concern that the CFP Board was rushing its revisions.
“When (the CFP Board) made its original announcement, I was concerned that the comment period wouldn’t be given its full due,” said Hammerman. “Now it sounds like you’ve already planned when it is going to roll out and go into full effect.”
Hammerman was also concerned that the CFP Board was adding an additional level of complexity for advisors and broker-dealers already coping with shifting federal and state fiduciary regulations.
In June, the CFP Board proposed that the fiduciary standard be applied to any type of financial advice rendered by a CFP whether or not they are offered within the context of a financial plan. The broader definition essentially eliminates a “two-standard” approach for CFP professionals that allowed a looser standard of care for advice rendered to clients outside the context of a financial plan.
As previously proposed, the new standards would have required CFPs to be responsible for disclosing and clarifying rules for compensation to their clients, even in cases where their employers may obfuscate or misrepresent compensation methods. CFPs who receive compensation from commissions cannot continue to use the term "fee-based" if it could lead clients to believe that they are providing fee-only advice, according to the revisions.