CFP® professionals – like any professional – are expected to give advice in the best interests of their clients. Both as a hallmark of professionalism, and simply because it’s good business to do so. Yet in practice, it’s not enough to just say that CFP® professionals are fiduciaries; professional adherence requires setting forth clear Standards of Conduct about how, exactly, CFP® professionals are expected to deliver their services in a fiduciary manner, so CFP Board can determine when a CFP® professional is not meeting their obligations and may need to be disciplined… or, at worst, have their CFP® marks suspended or revoked.
To provide clear guidance, CFP Board’s new Code of Ethics and Standards of Conduct (“Code and Standards”) delineate a series of 15 Duties To Clients that CFP® professionals must adhere to, from the Fiduciary Duty to Clients itself, to an obligation for providing key information and relevant disclosures of Material Conflicts of Interest, confidentiality obligations, the duty to uphold core professional principles including Integrity, Competence, and Diligence, as well as entirely new Duties regarding the selection of external professionals (to which the CFP® professional may refer clients) and even the selection of technology itself.
In addition, CFP Board’s new Code and Standards also establish new guidance in previously controversial areas, particularly with respect to how CFP® professionals disclose their compensation, and the use of compensation disclosures as a marketing term (e.g., the “Fee-Only” label)… not to induce CFP® professionals towards any mode of compensation in particular, but simply to ensure that whatever compensation methodology the CFP® professional chooses, that they are accurate in how they describe their prospective compensation to their Clients.
In the end, the 15 Duties Owed To Clients by CFP® professionals are not meant to impose substantial new obligations on CFP® professionals – and in reality, are commonly followed and generally recognized as best practices anyway. Still, though, by enumerating the 15 Duties as part of the Code and Standards itself, CFP Board both provides additional guidance to CFP® professionals on what they are expected to do as a matter of not just “best” but standard practices… and also establishes the grounds by which CFP® professionals may be disciplined for failing to meet the minimum standard of their professional duties!