Forget the SEC advice rule — broker-dealers more concerned with CFP Board expanded fiduciary standard ​

CFP Board's updated code of ethics and standards goes live in October

Jun 7, 2019 @ 2:00 pm

By Bruce Kelly

Lawyers across the brokerage industry are busily reading and digesting the Securities and Exchange Commission's investment advice reforms approved this week. But some firms are also gearing up for more changes promulgated by the organization that administers one of the most sought-after designations in the industry: the Certified Financial Planner, or CFP.

The Certified Financial Planner Board of Standards Inc. in 2018 approved a new code of ethics and standards of conduct, expanding a fiduciary standard as part of its revamp to the designation's conduct requirements. Under the new standards, all CFPs — including brokers — must act in the best interests of their clients when providing financial advice.

Under the new SEC reforms, brokers do not have to operate under a fiduciary standard.

Many in the retail securities industry dislike the CFP Board's updated code of ethics and standards of conduct, which is to take effect in October.

"Similar to state fiduciary efforts, the CFP Board's code adds yet another standard demanding compliance by firms and advisers," wrote Chris Paulitz, a spokesman for the Financial Services Institute, in an email. "And with more standards come greater complexity, higher costs and increased likelihood of error."

The FSI is a trade organization that represents independent contractor broker-dealers.

Last February, eight major brokerage firms called on the CFP Board in a comment letter to halt its effort to raise the investment-advice requirement attached to the designation until the SEC proposed its own standard. The firms also criticized the new standards of conduct as impractical and duplicating existing regulations as well as for being overly broad.

One of those firms, Edward Jones, has recently sent a letter to advisers expressing concerns about the new standards and how they affect financial advisers, according to an industry source who asked not to be named.

A spokesman for Edward Jones, John Boul, said that the firm is reviewing the SEC's Regulation Best Interest to see how it would work alongside CFP's fiduciary standard and will have more to say, possibly as early as next month.

Similarly, other large broker-dealers are in the process of reaching out to financial advisers in their network who hold the CFP designation to ensure they have the information they need to prepare for the Oct. 1 compliance date.

Meanwhile, Kevin Keller, chief executive of the CFP Board, said he would have liked to have seen more fiduciary teeth in the SEC's rule, but is now relishing the idea that the CFP designation "will become a lot more valuable to consumers."

"Now that the SEC has issued its Regulation Best Interest rule and related guidance for investment advisers, consumers should know that nearly 85,000 CFP professionals will be obligated to provide financial advice under a fiduciary standard," he said.

0
Comments

What do you think?

View comments

Most watched

INTV

Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print