The Certified Financial Planner Board of Standards' 60-day comment period and scheduled town hall meetings to gain feedback on the Board's new practice standards that were released on June 20 are nothing more than a show of faux collaboration.
The CFP Board is taking a page right out of the Labor Department's playbook: Announce a comment period, hold hearings, and then conduct a press conference to claim that the Board "listened" to certificants and made "material" changes to their "proposed" standards.
Baloney.
The Board doesn't give a hoot about certificants, nor about the best interests of the public. The Board's fiduciary initiatives are being fueled by politics, power, ego and greed.
More to the point, there are two reasons why CFP certificants should "just say no" to the Board's recently released standards:
- The vast majority of certificants have not been properly trained on fiduciary prudent expert standards, and as a result are going to be exposed to considerably more risk and liability; and
- The Board wants to foist moral and ethical standards on certificants that the Board is not willing to impose on its own leadership.
A fiduciary standard requires more than simply acting in the best interests of another. It also carries an implicit understanding that the fiduciary will act as a prudent expert. To illustrate:
- What fiduciary practices are associated with the preparation and delivery of an insurance proposal?
- Could a certificant face fiduciary liability if a financial plan for a near-retired couple did not include a proposal for long-term health care?
- Does a certificant have fiduciary responsibility for monitoring a financial plan once it has been implemented?
Simply stated, if a certificant is sued by a client for breach of fiduciary responsibility, the client's attorney is going to call multiple expert witnesses to pick apart every component of the certificant's planning process. As a defense, the certificant may try to argue that he or she met the generally accepted practices of a financial planner, but such a defense will likely be insufficient.
The numerous problems associated with painting every financial planner with a broad fiduciary brush were first identified by the Financial Planning Association in 2009. The association's leadership made a decision to develop a series of handbooks that would identify the fiduciary best practices associated with each pillar of the financial planning process.
