CFP Board Elevates Adviser Standards with Major Revisions
In the evolving debate over financial advisory regulation, the CFP Board has introduced enhanced standards to elevate the professionalism of Certified Financial Planners.
As discussions intensify about the regulation of the financial advisory sector, the CFP Board has taken a pivotal step by updating the standards governing advisers who hold the Certified Financial Planner (CFP) credential.
During its March 2018 meeting, the Board ratified significant amendments to its Code of Ethics and Standards of Conduct. Kevin Keller, CEO of the CFP Board, emphasized, "The foundation of these new standards is the expanded fiduciary duty expected from CFP professionals."
The Code and Standards represent the definitive ethical framework for CFP certificants. The Board not only establishes but also enforces these principles among the global community of 82,000 CFP professionals. Prospective certificants undergo rigorous background checks, and those with histories that conflict with the Board’s ethical criteria are disqualified from certification.
Key Enhancements in CFP Standards
The Board’s overhaul not only introduces fresh standards to keep pace with the dynamic financial planning landscape but also refines existing protocols. Richard C. Salmen, Chair of the CFP Board, shared at the Financial Planning Association Annual Conference in Chicago, “We eliminated redundancies across multiple documents through a comprehensive and substantial rewrite.”
Among the new provisions are detailed mandates for advisers to identify, manage, and disclose conflicts of interest, a streamlined and updated financial planning process, and clarified information disclosure requirements for clients. Additional directives address the appropriate use of the term “fee-based” and impose stricter obligations on CFP professionals to report misconduct to the Board within 30 calendar days.
Crucially, the updated guidelines broaden the fiduciary duty of CFP professionals. Previously, this duty was confined to financial planning advice; now, advisers must prioritize their clients' best interests in all financial advice scenarios.
Industry-Wide Impact and Implementation
Although the revised standards were announced in March 2018, CFP professionals were afforded an 18-month transition period to ensure compliance by October 1, 2019. To facilitate this, the Board has hosted multiple public forums and plans additional sessions nationwide to support advisers.
The Board has championed transparency throughout the process, welcoming over 1,000 comments during public consultation phases. It continues to release case studies to aid advisers and firms in interpreting and applying the standards effectively. Keller highlighted the commitment to offer "channel-specific guidance" tailored to the certificate community.
Salmen stressed the importance of proactive communication: “We want to avoid a ‘gotcha’ environment where advisers are caught unaware by the new rules, so we are actively addressing their questions in advance.”
These updated standards resonate beyond individual CFP professionals. Many firms with numerous certificants are revising their internal codes of ethics, compliance protocols, and account documents to align with the new guidance. Keller noted, “CFP certification and its practice standards promote a repeatable, documented process — something compliance officers highly value.”
Redefining the Benchmark for Financial Advice
While the CFP Board sets rigorous standards for its certificants and influences industry norms, it does not possess regulatory enforcement power akin to federal or state bodies like FINRA. Certification remains voluntary, and the Board’s jurisdiction extends only to those who hold and choose to use the CFP designation. Salmen remarked, “The Board can only regulate the use of CFP marks and issue public admonitions; it cannot restrict someone from practicing as a financial planner without certification.”
Nonetheless, the Board’s code and standards remain a defining feature of the CFP credential. Keller affirmed, “It is the Board’s ethical framework and the commitment of professionals to uphold it that distinguishes CFP certification in the marketplace.”
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