MINNEAPOLIS – Changes are coming to the CFP Board’s Code of Ethics. The sweeping changes are nearly three years in the making and although they go into effect Oct. 1, the Board has decided to delay enforcement of the new standards until June 2020 to coincide with the compliance date for the Securities and Exchange Commission’s Regulation Best Interest rule.
Financial Planner Dan Candura plans to present Wdnesday the new standards to conference attendees, highlighting key changes from the old Code of Ethics and elaborating on the more minute details.
One of the problems the CFP Board set out to address in its revisions was to sync its code of ethics with its practice standards.
“The practice standards support the Code of Ethics and the standards are more numerous, more specific,” Candura said of the changes.
As most of codes of ethics are, the CFP Board’s former code was aspirational with seven guiding principles. For their newest iteration, the Board wanted a code that was enforceable, not aspirational.
“Under the new standards,” Candura said, “there are six standards and they are enforceable at all times. They include all of the provisions that were in the previous standard, but they also add a standard to act in the best interest of the client.”
Candura said that the new standard established by the board goes further than the SEC’s Reg BI.
The new standard, however, will not define “best interest.” Candura said the board left this open for the SEC to define. However, the new CFP standards do include a fiduciary duty, building on the best interest concept.
“The fiduciary duty, which includes of course acting in your clients’ best interest, but it goes further than that and has a duty of loyalty, a duty of care and a duty to follow client instruction,” Candura said.
The old standards only required CFPs to act as a fiduciary when they were doing financial planning. Now, the standard is that CFPs are required to act as fiduciaries whenever they are providing financial advice.
“Any time a CFP professional is working with a client, they are going to have to act in the client’s best interest and if they are delivering financial advice, they are going to have to act as a fiduciary,” Candura explained.
He believes these changes better align the CFP Board with global trends.
“The trend certainly has been – both in the U.S. and around the world – to impose fiduciary standards on people providing financial advice to consumers,” Candura said. “I think we all see that and I think that trend will continue.”
For more information on the changes to the CFP Board’s Code of Ethics and Standards of Conduct, visit cfp.net/code.
AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.