Bowing to pressure from the broad financial advice industry as well as individual advisers, the Certified Financial Planner Board of Standards Inc. said Tuesday morning that it will delay the enforcement of its expanded fiduciary standard for financial advisers and brokers who hold the group's CFP mark.
The new enforcement date will be June 30, 2020. It had been Oct. 1.
The change brings the timing of the CFP Board's new Code of Ethics and Standards in line with the timing of the Securities and Exchange Commission's Regulation Best Interest, known as Reg BI, which is designed to raise the broker standard above suitability by preventing brokers from placing their interests ahead of their clients' interests. Reg BI is also scheduled to take effect next June.
"Since the beginning of the nearly four-year process to review our standards, we said that CFP Board would not be led by what actions regulators take. But we won't ignore them either," Susan John, the chair of the CFP Board, said in a statement. "The board, however, does believe that the alignment of the SEC's enforcement date of Regulation Best Interest is helpful to our CFP professionals in that there is significant overlap in the two sets of standards — with a notable exception that CFP professionals are required to act as a fiduciary whenever they are providing financial advice to clients."
The CFP Board's new code of ethics and standards of conduct, which were approved last year, require all CFPs, including brokers, to act in the best interests of their clients when providing financial advice. In the past, such a fiduciary standard for CFPs only pertained to work on client's financial planning.
While the CFP Board is pushing back the date for the enforcement of its new standard, it will make it effective in October, as it originally intended. For conduct that occurs between Oct. 1 and June 29 of next year, the CFP Board will continue to enforce the standards of professional conduct it currently has in place for the 85,000 financial advisers who carry the certification.
Both big firms and individual advisers had asked the CFP Board for more time to adjust to the new code of ethics and standards of conduct, Kevin Keller, CEO of the CFP Board, said in an earlier interview. He told InvestmentNews earlier this month that the board was considering delaying enforcement of its new standard of care.