“Working in the best interest of the client is the most transparent, and we think the most objective, way of serving the public,” said Geoffrey Brown, NAPFA CEO, in comments released on Tuesday. “Consumers have recently come to expect advice delivered in their best interest and now, because of the broadening of the CFP Board’s fiduciary requirements, will be able to count on CFP professionals to act as a fiduciary when providing financial advice to a client.”
Brown said that NAPFA would withhold comment on other changes to the CFP Board’s standards until it had reviewed their implications for its membership of 3,000 fee-only planners, a position echoed by the Financial Planning Association (FPA).
FPA President Shannon Pik nevertheless voiced support for the broader fiduciary standard in comments released Tuesday.
The CFP Board’s revisions present a new definition of financial planning, describing it as a collaborative process that maximizes a client’s ability to meet life goals through advice that integrates a client’s personal and financial circumstances.
The revisions also create a clear definition of conflicts of interest and delineates rules for when and how conflicts need to be disclosed to clients,
Along with the substantial changes to its standards, the CFP Board has also changed its process for dealing with bankruptcies, which will be handled through the body’s customary disciplinary process.
The CFP Board announced a series of public comment sessions on Tuesday and a process for finalizing and implementing the new standards.
The changes further bolster the momentum towards conflict-free advice created by the Department of Labor’s fiduciary rule, which went into effect earlier this month.
“We applaud the CFP Board for its new Code of Ethics and Standards of Conduct,” wrote Schweiss. “With the Department of Labor’s conflict of interest rule taking effect, and now with the CFP Board’s new proposed standard, along with action we’re seeing in the states, the fiduciary standard is on the march across the land.”