In order to make better financial decisions, investors need simple, easy-to-understand disclosures written in plain English and provided before they hire a planner, the CFP Board recommended to the SEC.

“We believe that investor education, including timely and effective disclosures, is important to the protection of investors, regardless of who is providing the advice,” CFP Board Chief Executive Officer Kevin Keller wrote in a letter to the commission. “The additional disclosure requirements we recommend, many of which are currently embraced by CFP professionals under our Code of Professional Conduct, will help investors make key financial decisions including what type of advisor is best suited for them,” according to Keller.

The CFP Board sent the letter to the SEC as part of the commission’s study of financial literacy among investors.

“Additional disclosures alone are not enough to protect investors and build confidence in our capital markets,” Keller also wrote. “That is why we will continue to urge the SEC to adopt a uniform fiduciary standard of care applicable to all who provide personalized investment advice to investors.”

The letter to the SEC further recommends:

-- Requiring disclosures in four areas: conflicts of interests (including a financial intermediary’s standard of care), fees and costs, background of the financial intermediary and scope of representation.

-- That disclosures must be made prior to the engagement of any financial intermediary, including financial advisors, financial planners and broker-dealers.

-- Disclosures must be written in plain English, provided in writing and made available electronically.

Keller noted that a recent survey by CFP Board showed more than two-thirds (67%) of all Americans believe that they are solely responsible for their own financial security, including retirement. At the same time, 67% of survey respondents also agree that the government has a role in protecting investors from fraud and abuse.

Ann Marsh writes for Financial Planning.