CFP Board readies ethics lessons for firms that work with licensed planners
The Certified Financial Planner Board of Standards Inc. expects to roll out draft guidelines next month for insurance firms, broker-dealers, banks and money managers to help them comply with the organization's ethical standards for independent advisers.
The Certified Financial Planner Board of Standards Inc. expects to roll out draft guidelines next month for insurance firms, broker-dealers, banks and money managers to help them comply with the organization’s ethical standards for independent advisers.
The guidelines are being created by a new “business model working group” that the CFP Board established last summer. It was created after allegations that some companies may have been encouraging sales practices by CFP-certified employees or independent contractors that conflicted with the CFP Board’s conflict-of-interest and disclosure standards.
“The main purpose of the guidelines is to help these firms understand the ethical standards and to help them modify some of their business processes to accommodate them,” said Michael Shaw, the CFP Board’s general counsel.
The working group, which includes 22 people representing about 15 firms outside the independent adviser community, has held three meetings since August, and hopes to have a final guideline to present to the CFP Board’s annual Firm Meeting on Dec. 4.
The accrediting organization created the business-model panel following allegations from some former Fidelity Investments retail brokers that they received financial rewards for selling certain annuities and proprietary products — but were told they didn’t have to disclose the arrangement to clients. Fidelity has denied the charges. A Fidelity spokesman was not immediately available for comment.
The CFP Board responded by sending a notice last spring to all Fidelity-employed certificants to remind them of their ethical obligations and by subsequently setting up the committee. “We wanted to get better understanding of each other,” Mr. Shaw said.
State Farm Automobile Insurance Co. last December ordered some of its independent agents to relinquish their CFP designations in order to avoid conflicts with fiduciary standards of care for customers.
“Our concern lies with the CFP Board defining the financial planning engagement in a way that potentially subjects the sale of all financial services and insurance products to the same fiduciary standard,” Dick Luedke, a spokesman for the insurer, said at the time.
About 270 of State Farm’s 17,000 independent contractors held the certification.
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