CFP Board emphasizes fiduciary responsibility

NEW YORK — The Certified Financial Planner Board of Standards Inc. has adopted a revised version of its standards of professional conduct, placing a greater emphasis on the importance of fiduciary responsibility. The revised standards, which were released last week, will require a CFP to “at all times place the interest of the client ahead of his or her own” and will require a CFP to do so with the duty of a fiduciary. The new wording replaces a standard of “reasonable and prudent professional judgment” which appears in the CFP Board’s current code of ethics and professional responsibility. “Every [CFP] will have to double-check their practices to ensure that there is no question that they will operate within those standards,” said Karen P. Schaeffer, chairwoman of the organization’s board of directors. The standards are the culmination of a review process that the Denver-based CFP Board began in 2005. The revised ethical standards, effective July 1, 2008, will apply to the more than 54,500 CFPs in the United States. “The [previous standard’s] use of the term ‘prudent [professional] judgment’ was vague,” said Bernard M. Kiely, president of Kiely Capital Management Inc., a Morristown, N.J., firm that manages $65 million in assets. “But saying that you need to be a fiduciary is quite clear,” he said. “If that is the CFP Board’s standard, then there is going to be a problem for those who are not fiduciaries. It is an inherent conflict.” Some large brokerage firms, including Merrill Lynch & Co. Inc. and Morgan Stanley, both of New York, undertook initiatives a few years ago to increase the number of CFPs among their adviser ranks.