{"id":9302,"date":"2018-12-03T08:33:23","date_gmt":"2018-12-03T16:33:23","guid":{"rendered":"http:\/\/blog.paladinregistry.com\/?p=9302"},"modified":"2018-12-03T08:33:23","modified_gmt":"2018-12-03T16:33:23","slug":"new-codes-and-standards-redefine-certified-financial-planner","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/advisors\/new-codes-and-standards-redefine-certified-financial-planner\/","title":{"rendered":"New Codes and Standards Redefine Certified Financial Planner"},"content":{"rendered":"

With the introduction of an updated code of conduct, holders of the Certified Financial Planner (CFP) designation will now have to adhere to stricter rules when offering financial advice.<\/p>\n

These new standards<\/a><\/strong>, agreed to by the CFP Board on March 29, 2018 and slated to go into effect on Oct. 1, 2019, redefine Certified Financial Planner and financial planning for CFPs under the paradigm that they must act in the role of a fiduciary, with the greater level of responsibility this entails<\/a><\/strong>, whenever they give financial advice.<\/p>\n

Expanding the fiduciary standard to apply to all \u201cfinancial advice\u201d means that when providing such advice, advisors with the CFP designation<\/a><\/strong> will be required to put the client\u2019s best interests first at all times. Exceptions to these rules include responses to directed orders and providing marketing materials. General advice that would not reasonably be considered financial advice would also be exempt, according to the CFP Board\u2019s commentary on the new standards.<\/p>\n

The new rules have been praised by some industry figures, including Stephen Craffen, the chairman of the National Association of Personal Financial Advisors (NAPFA<\/a><\/strong>), a group for fee-only financial planners. According to NAPFA, these new standards will only benefit consumers. By mandating that CFPs follow the fiduciary standard, the rules help eliminate the conflicts of interest that can occur when a CFP advises clients about financial products. Some of these products, such as insurance policies or direct participation products like limited partnerships, can generate large commissions for a planner, thus bringing up potential conflicts of interest that the new rules are designed to address.<\/p>\n

Previously, a CFP serving in a dual role as both a financial advisor and insurance salesperson or registered representative (stockbroker), might be governed by a less rigorous standard, such as only selling a financial product to a client if it appeared to be \u201csuitable\u201d for them. Because of the ambiguity involved in defining suitability, such a standard has long been considered less consumer-friendly than the stricter fiduciary designation, with its mandate that a financial advisor must act in the client\u2019s best interest.<\/p>\n

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