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FAs Want More Info on CFP Board Fiduciary Proposal

August 24, 2017

The CFP Board’s proposal to expand fiduciary duty applicability to CFP designees has been met with calls for more clarification from fiduciary advocates and few comments from opponents of the fiduciary standard, InvestmentNews writes.

In June, the CFP Board sought comment on a proposal to hold advisors with a CFP designation to the fiduciary standard at all times, rather than only when they provide financial planning as mandated by the CFP’s current Code of Ethics and Standards of Conduct. The proposed new rule, among other changes, would require CFPs to “seek to avoid conflicts of interest, or fully disclose material conflicts of interest to the client, obtain the client’s informed consent and properly manage the conflict,” according to the publication.

But the Consumer Federation of America, which expressed “enthusiastic support” for the revision, according to a letter to the CFP Board by Micah Hauptman, financial services counsel at the advocacy group, nonetheless wants more clarity, InvestmentNews writes. In particular, the CFA wants more guidance on the extent to which a CFP-designated advisor must “fully disclose material conflicts only after properly managing those conflicts and obtaining a client’s informed consent,” pointing out that the revision could be interpreted as letting advisors off the hook by merely disclosing conflicts and getting a client’s consent.

The Financial Planning Association also applauded the CFP Board’s proposal, InvestmentNews writes, but asked for a “next layer of explanation and clarification” on how CFPs need to revamp their practices, including concrete examples.

But Knut Rostad, president of the Institute for the Fiduciary Standard, tells the publication that the CFP Board’s proposal isn’t stringent enough and requires more guidance.

Meanwhile, the trade associations that actively opposed the Department of Labor’s fiduciary rule when in it was in the comment period are mostly staying quiet on the CFP Board’s proposal. This includes the U.S. Chamber of Commerce and the American Council of Life Insurers, both of which have launched legal challenges to the rule that purports to require retirement account advisors to put clients’ interests first and went into partial effect in June, InvestmentNews writes. And while the National Association of Insurance and Financial Advisors tells the publication that its members with the CFP designation plan to submit comments, the association itself has not. Sifma also hasn’t commented as of Monday afternoon, according to InvestmentNews.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.