WASHINGTON, June 30, 2020 /PRNewswire/ -- Today, Certified Financial Planner Board of Standards, Inc. (CFP Board) begins enforcing its new, strengthened Code of Ethics and Standards of Conduct (Code and Standards). All CFP® professionals are required to abide by the Code and Standards, which went into effect on October 1, 2019.
The cornerstone of the new Code and Standards is a CFP® professional's obligation to act as a fiduciary, and therefore, act in the best interests of the client at all times when providing financial advice. This is a significant strengthening of the prior standard, which required a CFP® professional to act as a fiduciary only when providing financial planning. The fiduciary obligation includes a duty of loyalty, a duty of care, and a duty to follow client instructions. Other important changes in the Code and Standards include more detailed requirements for fully disclosing material conflicts of interest, obtaining informed consent, and managing those conflicts.
"Requiring CFP® professionals to comply with our strengthened Code and Standards raises the bar for the profession and benefits consumers who make important financial decisions with the assistance of financial planners," said Jack Brod, CFP®, 2020 Board Chair. "We are committed to upholding and effectively enforcing these important ethical and practice standards."
The enforcement date is the culmination of a five-year initiative to modernize the ethical standards for CFP® professionals. This deliberative, inclusive, and transparent process began with the formation of the Commission on Standards in 2015. Two drafts of the Code and Standards were released for public comment, generating more than 1,500 written and oral comments from members of the public, firms and CFP® professionals. Following the adoption of the final Code and Standards in March 2018, CFP Board turned attention to updating its processes for enforcing the Code and Standards. CFP Board recently released final new Procedural Rules and announced enhancements to its enforcement program, consistent with the findings and recommendations of the Independent Task Force on Enforcement.
In setting the June 30 enforcement date, the Board of Directors provided CFP® professionals and firms additional time to better understand and comply with the updated ethical and practice standards. Since the new Code and Standards was adopted in March 2018, CFP Board held 25 public forums around the country to educate CFP® professionals and others about the new Code and Standards and has developed a robust library of compliance resources, including a comprehensive "Roadmap to the Code and Standards" reference guide, answers to frequently asked questions, and a series of case studies that provide specific factual situations and ask a question about the CFP® professional's actions or duties under the new Code and Standards.
"At CFP Board, we know that one of the most important financial decisions most people make is choosing which professional to hire for financial advice," said Kevin R. Keller, CAE, CFP Board's CEO. "Our new Code and Standards emphasizes CFP® professionals' commitment to placing the client's interest ahead of their own at all times when providing financial advice, not just when providing financial planning."
ABOUT CFP BOARD
Certified Financial Planner Board of Standards, Inc. is the professional body for personal financial planners in the U.S. CFP Board sets standards for financial planning and administers the prestigious CFP® certification – one of the most respected certifications in financial services – so that the public has access to and benefits from competent and ethical financial planning. CFP Board, along with its Center for Financial Planning, is committed to increasing the public's awareness of CFP® certification and access to a diverse, ethical and competent financial planning workforce. Widely recognized by firms and consumer groups as the standard for financial planning, CFP® certification is held by more than 87,000 people in the United States.
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SOURCE Certified Financial Planner Board of Standards, Inc.