The new document provides an overview of new rules set to take effect in October
Earlier this month, the government of Ontario declared its intention to introduce legislation to protect titles for financial planners and advisors in the province. According to Ontario Minister of Finance Vic Fedeli, a new framework under development will require individuals using the “financial planner” and “financial advisor” titles to have an appropriate credential.
What the “appropriate credential” is may still be up in the air, but arguably the top contender would be the CFP designation, conferred to qualified Canadian advisors by FP Canada. Aside from knowledge- and skills-based qualifications, CFP holders must also meet a host of ethical and conduct-oriented standards that put the interests of clients first, among other duties.
For both CFP holders and aspirants, a new document from the CFP Board in the US will likely prove to be a useful reference. The title-granting body has released a “roadmap” infographic that outlines the structure and content of new rules of conduct that will take effect later this year.
“This Roadmap boils down the essential information that CFP professionals need to know,” said Leo Rydzewski, CFP Board's General Counsel. “At the same time, it provides resources that give clear, detailed information about when the Code and Standards apply.”
The Roadmap lays out the essential elements of the fiduciary duty required of all CFP professionals, which include duties of loyalty, care, and following client instructions. It also explains requirements for CFP holders to act with integrity, competence, and diligence, as well as to disclose and manage conflicts of interest.
Other duties owed to clients that the roadmap elaborates on include, but are not limited to:
- Sound and objective professional judgment;
- Confidentiality and privacy;
- Providing information to a client;
- Duties when communicating with a client;
- Duties when representing compensation method, with guidelines for fee-only, fee-based, and sales-related compensation;
- Duties when recommending, engaging, and working with additional persons; and
- Duties when selecting, using, and recommending technology
Aside from duties to clients, the Roadmap lays out definitions and expectations regarding financial planning, duties owed to firms and subordinates, and duties to the CFP Board.
The document also has five resources to help CFP professionals and their firms implement the new Code and Standards. For financial-advice engagements, there’s a reference guide to providing information to a client as well as a compliance guide; the roadmap provides similar guides pertaining to financial-planning engagements.
“The Roadmap will help CFP® professionals and their firms navigate any compliance issues they may have,” Rydzewski said. “This comprehensive document provides the framework CFP® professionals will need for just about any situation they face when working with clients.”
The CFP Board’s new Code of Ethics and Standards of Conduct, which can be downloaded in full from their website, will take effect on October 1, 2019.
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