CFP board spreads word on standards
Concerned that the public - and even some financial planners - are clueless about its practice standards, the Certified Financial Planner Board of Standards Inc. in Denver is on a mission to spread the word.
“I think the certificants are aware of [the standards] but, like many things, may not be totally aware of [their] significance,” says Gary Diffendaffer, executive vice president of the CFP Board.
Now that CFP staff lawyers and members of its board of professional review can bring practice-standards violations charges against certificants, a power granted to them earlier this year, the disciplinary body expects to see more complaints of practice-standards violations.
“I think we may see more in the future,” says Margaret Brock, an attorney and director of the professional-review department. “More clients will allege practice-standards violations in their grievances” as more become aware of them.
The CFP Board’s practice standards are a Bill of Rights for the financial planning process. They include straightforward precepts that outline for practitioners and the public what is expected in the planning process.
Just 10 sentences in all, the practice standards cover everything from defining the scope of the engagement and coming up with recommendations to agreeing on implementation and defining monitoring responsibilities. The standards are explained on the CFP website, cfp-board .org.
Developed over a number of years, the practice standards were finalized in January 2002. However, because the rules were implemented on an incremental basis, some feel there wasn’t “sufficient hoopla” when they were finally completed, says Lance Ritchlin, a CFP Board spokesman. Part of the CFP’s budget next year aims to make up for that.
“There is a growing feeling here that we need to do a better job of publicizing these [standards],” he says. “One, because financial planners are going to be held accountable for these practice standards … and two, because the clients have a right to file a grievance if they feel that there’s been a violation, and they need to know what their rights are.”
One area the practice standards are meant to address is making sure planners and their clients define the extent of their relationship – whether it will constitute financial planning. If not, the practice standards technically would not apply.
“There is some confusion on the part of planners and clients of when a financial planning engagement exists and when it doesn’t,” says Ms. Brock. “I think the message the board is trying to promote is that the engagement needs to be defined. That is something that both clients and planners need to be aware of.”
Herbert Daroff, a lawyer who helped write the practice standards, feels that CFP certificants should behave as though the standards applied all the time.
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