As plans to tighten rules of conduct for Certified Financial Planners were announced on Tuesday, several champions of the fiduciary standard voiced their support.
The Certified Financial Planner Board of Standards issued a request for public comment on sweeping revisions to its Code of Ethics and Standards of Conduct that would broaden the application of a fiduciary standard for advice among CFP professionals.
The CFP Board is shifting its language for when an advisory must adhere to a fiduciary standard. Where previous versions of the Standards for Conduct required that all recommendations rendered when planning be held to the fiduciary standard, the proposed changes would apply the stricter standard to any kind of financial advice.
“Extending the fiduciary standard to the financial advice component of the relationship helps clarify a CFP professional’s position with respect to the standard of care extended to investors throughout the engagement, and it further raises the standard of care for investors, who deserve to know the CFP professional is acting in his or her best interest not just when providing financial planning services, but also when implementing the plan via financial advice,” said Skip Schweiss, managing director, retirement plan services & advisor advocacy, via e-mail.
The broader definition essentially eliminates a “two-standard” approach for CFP professionals which allowed a looser standard of care for advice rendered to clients outside the context of a financial plan
Doubling down, the Board’s revisions presume any advice rendered by a CFP certification holder to be in the form of financial planning.
The National Association of Personal Financial Advisors, a professional organization representing fee-only planners, applauded the CFP Board’s broad application of the fiduciary standard.
“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.