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Critics Slam CFP’s Proposed Changes to Conduct Rules

February 5, 2018

Some certified financial planners aren’t happy with the CFP Board’s proposal to update its conduct standards, but their reasons diverge, according to ThinkAdvisor.

David Yeske, managing director of the wealth management firm Yeske Buie and a past president of the Financial Planning Association, and his colleague, Elisse Buie, have written comment letters to the CFP Board expressing their frustration with how the six-step financial planning process is being made “unnecessarily” into a seven-step process, the publication writes. Yeske argues there’s little reason to split “develop and present planning recommendations” into “develop” and “present,” according to ThinkAdvisor.

But the CFP Board clarifies to the publication that it’s actually removing the first step, “Defining the Scope of the Engagement,” and putting it elsewhere. It does split the second step, but that’s “Gathering Client Data,” the Board tells the publication. And the third step — “Developing and Presenting the Financial Planning Recommendation” — is actually being split into three steps, not two, the Board tells ThinkAdvisor.

Michael Kitces of Pinnacle Advisory Group is pleased with the Board’s “efforts to advance a fiduciary standard for all CFP certificants,” he says in a letter cited by the publication. Nonetheless, Kitces criticizes the new set of standards for effectively creating two types of advice from CFP professionals: “financial planning advice, and non-financial-planning financial advice,” he writes in his comment letter, according to ThinkAdvisor. This could have an effect of letting CFP professionals avoid their accountability to the CFP Board’s standards by simply not offering financial planning advice, Kitces says, according to the publication.

Rick Kahler of Kahler Financial Group tells the CFP board that the new standard weakens protection of investors and in fact tells consumers they can’t expect a CFP professional to deliver fiduciary financial planning, ThinkAdvisor writes.

Rick Kahler

The CFP Board will review the feedback received during its comment period, which ended Friday, and plans to roll out a final code of conduct with an effective date of Jan. 1, 2019, according to the publication.

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