The CFP Board of Standards said it will not table its proposed best-interest code of standards in the face of mounting pressure from eight broker-dealers and their associations. The brokers are asking the board to wait for the Securities and Exchange Commission to propose its own standards.
“The CFP Board’s work is informed by the regulatory environment, but its standards-setting process is not driven by potential regulatory action,” wrote the CFP Board’s general counsel, Leo Rydzewski, in an e-mail to Financial Advisor.
“Moreover, CFP Board cannot predict whether or when the SEC will act, or what the SEC will do. Should the SEC take action, CFP Board will evaluate what, if anything, should be done at that time,” Rydzewski said.
As a non-profit organization that exists to benefit the public, the group has an independent obligation to set high standards for CFP professionals, he added.
The board is expected to review and approve its proposed Code of Standards by the second quarter of the year and make the code effective for its 80,000 CFPs by January 1, 2019. The SEC has yet to propose fiduciary or best-interest standards, but has indicated it expects to release a proposal in the second quarter of 2018.
FPA And NAPFA Wants The New Code To Proceed
Planning associations including the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA) both told Financial Advisor they want the CFP Board to proceed with the new code of standards and not wait for the SEC to take action.
“We think that what the CFP Board is doing is right on track,” said FPA National President Frank Paré. “The reality is if you are a CFP and are carrying those marks, there are standards you must live by. It should not be that you can say I’m a CFP, but when I offer this particular product, I don’t have to live by CFP standards.”
NAPFA President Scott Beaudin said the CFP Board standards are designed to ensure that consumers know whether they’re sitting across from a fiduciary advisor or a salesperson. “There is room for both,” Beaudin said. “But we have seen in study after study that consumers don’t understand it when you take off one hat to put on another.”
Added Beaudin: “If a firm decides they can’t live with the CFP Board’s standards, they can make the decision not to hire or work with CFPs. This is a voluntary professional designation, but an important one that lets consumers know that a fiduciary advisor has their best interests at heart all the time, not just some of the time.”