While the reaction to the CFP Board's new proposed standards of conduct has been mostly positive, many commenters have expressed serious misgivings about the practical impact of the changes.
In statements submitted to the board's website since it released the proposed changes in early June, some advisers predict that more planners will drop their CFPs. Others applaud the board for furthering the professionalism of the planning field. More than 50 people, most of whom identify themselves as advisers, commented on the suggested changes between June 20 and July 6. The official comment period ends on August 21.
Although the board says the revised standards will “effectively [require] CFP professionals to put a client’s interest first at all times,” critics have argued they permit advisers to avoid a fiduciary obligation when not engaging in financial planning.
Read on for a lightly edited survey of the comments.
Richard Feight (adviser)
I applaud the CFP Board for the proposed new standard for delivering all financial advice under a fiduciary standard. This is clearly a move towards establishing more credibility in the eyes of the public, media and practitioners. It’s also a move towards establishing financial planning as a true profession.
George Cullinan (adviser)
For some reason, whoever wrote this is dancing all around the issue but doesn’t really want to change anything. Either define what a conflict of interest is and eliminate it or don’t, but don’t play word games by saying that anybody can “manage a conflict of interest.” It can’t be done.
Thomas Pitrone (adviser)
If I’m engaged by a client who just doesn’t want a financial plan or someone who wants specific answers but doesn’t want to pay for a plan, will I have to walk away from the engagement? Who will determine if my plan is adequate for the situation? How will that be monitored? What will the consequence be if my plan is determined to be insufficient? Will there be a safe harbor plan?
Thomas Mayo (adviser)
I mostly like the new CFP rules as explained on the site. The problem is that I now have too many government and professional groups telling me their view of what is best for my clients…. Sorry, but the odd person out may be the CFP Board. The government agencies carry more oomph! No one in the past 20 years has hired me because of my CFP credentials!... If the DOL Rule is enacted in January 2018 as it is, there is a good chance I will cancel my CFP certification.
Anne Ward (adviser)
I support these changes and feel they are critical in establishing credibility in our industry. A broader fiduciary standard is the right thing for the client and brings us up to the level of physicians and attorneys.
I’m so embarrassed every time I go to an FPA meeting and I have to sit next to the sales guy from the insurance company who thinks he does what I do. Imagine awarding a Pfizer drug rep an MD.... Please professionalize us and force anyone with the CFP to act as a true fiduciary all the time. The public can't parse this and they need your protection. Would you send your grandmother to a nonfiduciary CFP at a wirehouse? Jump on the Department of Labor’s bandwagon. Change the world!
Brian Carlton (adviser)
Congratulations, board! You are moving us closer to being real professionals! It is only right and true that when we plan for our clients that we always hold their interests above all others — with every bit of advice we give — all the time. Let us be known as professionals and hence are not selling any products. Let’s implement this new rule so the public knows we are either professionals or salespeople.
Randall McGill (adviser)
I am honestly confused by all the conversation and concern about the “change” in the rules and expectations. Since when has putting the client first NOT been our job as professionals? I do not see how anything has changed here.
Genti Cici (adviser)
I don’t believe [the proposed standards] go far enough. They could even backfire and give false hope that now (with the new standards) ALL CFPs are fiduciaries, at ALL TIMES, which is what I first thought. But if we read carefully at part B, we see that while the standards call for a fiduciary duty, the CFP has room NOT to use the standards.… The CFP can still be paid commissions and not be a fiduciary at certain times. Thus clients will still be confused.
Robert Burns (adviser)
I adamantly protest the proposal. When does it get to be too much bureaucracy? We have FINRA, the SEC, the IRS and the Department of Labor all seeing who can out-regulate whom. It is getting ridiculous …. By your heaping more onto us, you end up increasing the cost of our doing business. Because you all want it make it easy for us to be sued, the cost of our insurance will go up. Let the regulators regulate. You stay out of it. .... Ninety-nine percent of us are good people intent on doing the best possible job for our clients. Now get out of our way!
Bruce Popper (adviser)
Is it the board’s opinion that the Department of Labor’s rules don’t go far enough? ... Taking on the role of a fiduciary in just about everything we would discuss with a client inserts us into the relationship like a trustee and, given the choice, most of us would reject the opportunity to function as a trustee for clients. As such, I believe many qualified CFP practitioners will exit the financial planning arena in whole or in part or may choose to drop the CFP designation altogether and operate under the constraints of the DoL rules only.
Meg Bartelt (adviser)
I appreciate that the fiduciary standard is now required at all times when giving any sort of financial advice. I have always really disliked the “now I take my fiduciary hat off and put my suitability hat on, but you can’t see I’m doing that, ‘O Ignorant Client Folk!’” thing. This does make me wonder what’s going to happen to CFP certificants at companies that sell products (like insurance companies, BDs). Where there will now be a primary obligation to both the company and the client, which one trumps?
Darlene Tucker (adviser)
I think the CFP Board has lost its way and assumes that protecting consumers means more regulation. All the rules and regulations in the world won’t prevent a dishonest person from becoming the next Bernie Madoff, but better education of consumers might protect them from becoming the victims!
I would like to see measures from the CFP Board that indicate they have a positive view of their certificate holders as competent and ethical. Instead it generally feels like the board assumes we are all crooks looking for ways to take advantage of our clients.
Mark Wilden (adviser)
Will we be able to continue to do commission-based products — which, when the client is a buy-and-hold investor, are less costly, historically, than a fee-based relationship?
Don Tapp (adviser)
I think a standard of fiduciary duty to all clients is very dangerous and misguided. It appears to me that the board and many practitioners seem to be blind to the responsibility and liability that comes with fiduciary duty and the fact that it is unwarranted and beyond the scope of many of the engagements we currently accept. Has the board considered the increase in costs to all practitioners and the narrow scope of engagements that we will now be willing to accept?
Brent Kimbel (adviser)
I support the board’s recommendation to expand the fiduciary standard. It’s critical that we are always working in the client’s best interest. It’s also critical to then use this new stance in the commercials and marketing efforts of the CFP so the public can see we hold ourselves to a higher standard.
John Conlin (adviser)
Overkill! We are out here in the field trying to comply with the Department of Labor and the regulations are overwhelming and will only hurt small investors.
The CFP Board is overstepping its authority to define CFPs as acting in a fiduciary capacity at all times. Every financial adviser is affiliated with a broker-dealer who has oversight and potential liability for the actions of its advisers, and therefore determines the specific circumstances under which the adviser acts as a fiduciary. The CFP Board does not have oversight and is attempting to exercise authority it does not possess.