Major financial trade groups to CFP Board: Slow the effort to raise mark's fiduciary standard

SIFMA, FSI want the Securities and Exchange Commission to go first

Jan 25, 2018 @ 2:19 pm

By Mark Schoeff Jr.

Two prominent financial industry trade groups want the Certified Financial Planner Board of Standards Inc. to halt its effort to raise the designation's advice standard until the Securities and Exchange Commission has proposed its own fiduciary rule.

Last month, the CFP Board released a second draft of revisions to the standards of conduct attached to the mark.

Under the proposal, all CFPs, including brokers who hold the credential, must act in the best interests of their clients at all times when they are providing financial advice. The current standard holds CFPs to a fiduciary standard only during the financial planning process.

The CFP Board is taking comments on the proposal until Feb. 2 and has promised to issue a final rule by this summer.

Meanwhile, the SEC is planning to propose its own fiduciary rule this year and the Labor Department is reviewing its fiduciary regulation under a directive from President Donald J. Trump that could result in major changes.

The Securities Industry and Financial Markets Association, which represents brokerages and other financial institutions, wants the CFP Board to stand down for now.

"We share the CFP Board's interest in ensuring that financial advisors act in the best interest of their customers," SIFMA managing director and associate general counsel Kevin Carroll said in a statement. "The SEC is currently working on a best interest standard that would apply to all financial advisors — not just CFP certificants, expected later this year. It would be counterproductive for the CFP Board to front-run the SEC's efforts. The CFP Board should pause and allow the SEC to take the lead."

The Financial Services Institute, which represents independent broker-dealers, also said that it supports a best-interest advice standard — but not one from the CFP Board right now.

"While the CFP Board has good intentions in its proposal, they are one of many actors currently in the fiduciary space," Robin Traxler, FSI vice president of regulatory affairs and associate general counsel, said in a statement. "With the DOL, the SEC and states such as Nevada all at various points in the process of developing standards of care for financial advice, there is a high risk of the industry ending up with multiple, conflicting standards. We believe the CFP Board should delay their proposal until the SEC standard has been sufficiently developed and implemented so that both investors and the industry are clear on what duties exist and how they apply."

The CFP Board is going to forge ahead.

"CFP Board appreciates that SIFMA and FSI recognize the need for a heightened standard for investment advice," CFP Board chief executive Kevin Keller said in a statement. "As longtime advocates for a fiduciary standard for all investment advice, we believe that there is never a wrong time to do the right thing."

Over the last few weeks, the CFP Board has been trying to build momentum for its rule change. In December, it took out a full-page ad in the Wall Street Journal touting support for a revised fiduciary standard from investor advocates and consumer groups.

In the Jan. 29 edition of Mopedia, the CFP Board will run another full-page ad. This one is an open letter from 21 academicians who lead programs at universities around the country that confer bachelor's degrees in financial planning.

"We strongly encourage our students and graduates to pursue careers at financial services firms that support the high standards of CFP certification and embrace fiduciary advice," the professors wrote.

The CFP Board administers the educational and ethical standards for the designation. There are more than 80,000 CFPs in the United States.


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