I wanted to share with clients and the public my thoughts regarding CFP Board’s proposed changes to Standards of Professional Conduct, and specifically the expansion of the role of a CFP® professional as a fiduciary when providing financial advice.
I am a one of the world's biggest critics of the vague and punitive ‘fiduciary rules’ that national and state legislative bodies have been adapting. They have changed the industry and will continue to, largely increasing costs, removing alternatives, and stifling growth and competition.
I sincerely hope CFP Board’s expansion of their rule and oversight of certificants is what wins the day when it comes to regulating planners. They have the oversight capabilities to evenly apply a standard across all of the various types of financial advisors with the knowledge that each serves a different type of client.
The legislative rules are based upon false beliefs that advisors need to be told what is best for a client (though, it provides exemptions and seemingly will ignore some very conflicted firms), and that they will not seek out serving a client’s best interests as a part of a mutually beneficial relationship. Many who have pressed for their passage have even more narrow ideas about their application that will lead to less availability of advice and worse outcomes for clients.
If you’re at all interested in hearing a summary of the proposed changes and providing feedback see the page at CFP Board’s website.
I applaud CFP Board for taking this step and hope that there are larger plans for using it to advance the interests of certificants and growth of the profession. Ideally this could a door to growing awareness of our profession by working with legislators to back this version to be the one standard that we all want. I agree with others who have commented that the number of legislative bodies now looking at creating rules is a threat to our ability to serve. All others seem to start with the worst assumptions about the industry, provide exemptions that create an uneven playing field, and are creating confusion for practitioners and the public. It would be ideal for CFP Board to work with state and national bodies to get behind this version and CFP Board’s ability to be a SRO for this. Regulators will not be able to apply their rules impartially and consistently in the way CFP Board can. Practitioners have been and will continue to be harmed by the many legislative bodies proposing rules – whether they are state residents or not – and we should use this rule to inform them on the costs that will be imposed on state citizens, the harm that will come to practitioners in every state, and costs to consumers when our services are less available. There will be thousands of independent regulators judging whether our actions were in a client’s best interest. For those reasons, only other professionals can be effective judges of upholding a single and meaningful standard. CFP Board has processes for handling complaints against practitioners already and would be an ideal place to handle these complaints for both the public and industry. I also sincerely appreciate the fact that CFP Board has been committed to inclusion of all types of professionals who work to improve better outcomes, and is not showing biased towards any way of working with a client. It’s this freedom for consumers to find and choose professionals that best fit their needs that will advance the profession and increase outcomes. CFP Board is the only body that can have a standard that increases standards of practice by shining a light on members that we with the positive commitment to work in their interest, that is flexible enough to adapt to an industry always seeking to change and grow for the best interests of the public, and that can be applied evenly across the vastly diverse practitioner and client types.