Will Edward Jones stop advisors from using the CFP designation?
Friction between the CFP Board and Edward Jones over the board’s new professional standards of ethics and conduct is leading some advisors at the firm to question whether they’ll be permitted to use the industry’s most popular credential.
The discord, spurred by recent Edward Jones messaging to advisors about the board’s efforts to update its standards, including a stronger fiduciary duty, has prompted some of the nearly 2,000 CFP professionals at the company to take their questions directly to the CFP Board.
“Edward Jones as a firm does not act as a fiduciary,” an advisor wrote to the board, according to a person who shared details of this and other letters. “Can you provide light on my situation? Will I be forced to choose between my designation or the firm where I have worked for more than 20 years?”
The dissention also raises broader questions for the firm and the profession: Could Edward Jones advisors compete without CFP marks at a time when thousands of advisors are signing up to earn the credentials? Will the board suffer if one of the nation’s largest brokerages shuns it? And if Edward Jones goes, will other firms follow?
Edward Jones, which has more than 17,000 advisors and $1 trillion in assets, has told employees that it is working on resolving issues with the board and has instructed advisors studying for the CFP exam to continue doing so. But what happens when the new, stronger standards of conduct take effect Oct. 1 is unclear.
“Edward Jones is constantly evaluating the overall landscape to best serve our clients. We continue to have discussions with the CFP leadership, but we have made no decision with respect to the CFP’s implementation date,” a company spokesman said in an email.
Among other sticking points, there are concerns about an expanded fiduciary obligation; about whether the CFP standards would conflict with the SEC’s proposed Regulation Best Interest; and how a firm will monitor an advisor’s responsibility to meet the standards.
Asked for comment on the matter, the CFP Board did not directly address Edward Jones’ concerns, but says it adopted its standards after “after extensive engagement with the public, CFP professionals and the firms at which CFP professionals work,” according to an emailed statement.
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The board “believes that all CFP professionals, regardless of the business model in which they work, may act as a fiduciary when providing financial advice to a client. We look forward to continuing to work with CFP professionals, and their firms, to develop additional guidance materials that reflect a CFP professional’s commitment to acting in their clients’ best interests.”
At least one advisor questioned whether it was time to get different credentials. But choosing another might be challenging.
While there are a slew of professional designations, few are as popular as the CFP, which has become something of an industry benchmark due to the board’s marketing and education efforts and the swelling ranks of CFPs. More than 84,000 financial professionals hold the certification. Some other designations are positioned as advanced professional development that complements what an advisor learns in preparation for the CFP exam.
Many firms have come to prioritize it. UBS, for example, encourages employees at its Wealth Advice Center to earn the credentials. Many wirehouse teams have a CFP or two on their teams. Merrill Lynch is the nation’s leading employer of CFPs, with more than 3,900 as of last year.
“The partnership between Merrill Lynch and the CFP Board is enormously strategic and deeper and deeper for us,” Merrill Lynch head Andy Sieg said at a CFP diversity conference in October.
It’s not clear that, should Edward Jones shun the CFP marks, that other competitors would follow. But there is precedent for such a move; State Farm forced its roughly 500 CFPs to relinquish the credentials when the board updated its standards in 2009 to include a fiduciary obligation under certain circumstances.
Edward Jones operates a unique model within the brokerage industry. The St. Louis-based company trains many of its own brokers rather than recruit talent from rivals. The firm typically operates offices in small towns and suburbs that are staffed by a single broker and an assistant whereas its wirehouse rivals prefer multiple brokers in centralized offices, often in urban locations.
If Edward Jones shuns the CFP marks, advisors at the company cannot easily decamp for a competitor. The firm is not a member of the Broker Protocol, and industrywide agreement that permits brokers switching firms to take basic client contact information with them.
In an SEC filing earlier this year, Edward Jones warned that state-level efforts to enact fiduciary rules “may have an adverse effect on the partnership's financial condition, results of operations, and liquidity.” It did not say anything with regard to the CFP Board’s new standards.
But, last year, Edward Jones and seven other brokerages asked the board to hold off while the SEC finalized its proposed Regulation Best Interest, citing concerns that the two standards would conflict.
“There is no compelling reason why the revised proposal should move forward at this particular juncture,” the firms wrote.
The CFP Board risked “adding to the growing patchwork of standards of care,” the firms warned. Lobby groups such as SIFMA and FSI, which represent brokerage firms, have taken a similar line against state fiduciary rules.
Regulatory standards of conduct have swung back-and-forth in recent years. When the CFP Board began revising its standards in 2015, the Department of Labor’s fiduciary rule appeared set to be the industry benchmark. Yet that regulation was vacated in 2018 when a federal appeals court ruled in favor of SIFMA, FSI and other lobbying groups that had sued the department to block the rule.
And, despite its name, the SEC’s controversial proposal falls short of a fiduciary standard which would have required advisors and brokers to act in the best interests of clients. The SEC’s proposed rule relies instead on disclosure of conflicts of interest. Commissioners will vote June 5 on whether to approve Reg BI.
The CFP standards are compensation neutral and are also specific to CFP holders, not firms, according to Barbara Roper, director of investor protection for the Consumer Federation of America and who was involved in developing them.
“It doesn’t require the elimination of conflicts, but it goes beyond the SEC by saying once you disclose your conflicts, then you need to manage them in the best interests of the customer,” Roper says. “Best interest actually means best interest under the CFP standard.”