CFP Board looks to tighten certification, disciplinary rules for planners

Investment advisers seeking certification as a financial planner would have to demonstrate work experience in a narrower calendar surrounding their examination date, under changes proposed by the Certified Financial Planner Board of Standards Inc. .

Investment advisers seeking certification as a financial planner would have to demonstrate work experience in a narrower calendar surrounding their examination date, under changes proposed by the Certified Financial Planner Board of Standards Inc.

The CFP Board announced today that it is soliciting comments about revisions to its certification and disciplinary procedures.

The organization is emphasizing hands-on experience in providing financial planning services to clients. Working for two years in such a role would satisfy the experience requirement, down from the current three years.

The experience standard also can be fulfilled through three years of direct support or supervision of financial planning services, or two years of teaching in a CFP-registered program.

The window for qualifying experience would be reduced to five years before or five years after successful completion of the CFP exam. Under current rules, the window extends from 10 years before to five years after the test.

“We wanted to make sure experience is current and reflects financial planning usage today,” Michele Warholic, the CFP Board’s managing director for education, examinations and talent, said of the proposed changes. “We want to distinguish between personal delivery and all other forms of financial planning services.”

Within the new experience time requirement, the CFP Board would eliminate the current rule that some of the experience be acquired within six months of filing the work-experience report.

The new rules also would require that the person attesting to the CFP applicant’s experience be a CFP mark holder in good standing. Experience is one of the four areas in which an applicant must qualify for a CFP mark. The other three are education, examination and ethics.

The CFP Board awards the CFP certificate to individuals who pass an initial exam, undergo a background check and fulfill follow-up requirements. The organization polices the 62,600 advisers who hold the CFP mark.

The CFP Board also is proposing to strengthen disciplinary standards. One revision would institute an “automatic interim suspension” of a CFP mark in cases of suspected egregious misconduct.

There would be no right of appeal for the interim suspension. Suspected wrongdoers would not be able to assert a constitutional privilege against self-incrimination to shield themselves from discipline. A failure to respond to a request for information from the CFP Board could lead to “adverse inference” by the organization.

“Our proposed changes to the disciplinary rules will provide clarification to our rules and procedures, strengthen our investigative and hearing processes, and incorporate best practices of established professions that have a disciplinary process,” CFP Board chief executive Kevin Keller said in a statement.

(Click on the following link to view the revisions to the experience requirement. Click on this link to view the revisions to the disciplinary rules and procedures.