Miscellaneous FAQs

In December 2015, CFP Board formed a Commission on Standards to review and recommend to CFP Board’s Board of Directors proposed changes to the Terminology, Code of Ethics and Professional Responsibility, Rules of Conduct, and Practice Standards sections of the Standards. Commission members included CFP® professionals and others in the financial services industry who operated under diverse business models, as well as prominent regulatory experts, a consumer advocate, and a representative of the public. CFP Board gathered input from a wide variety of stakeholders by hosting 17 public forums in cities located across the country, and by hosting meetings with the Financial Planning Association, the National Association of Personal Financial Advisors, the Securities Industry and Financial Markets Association, the Financial Services Institute, and CFP Board’s Business Model Council (which is comprised of firm representatives from a wide range of business models). CFP Board also issued two drafts of the Code and Standards for public comment, and considered more than 1,500 written comments and hundreds of oral comments from CFP® professionals, firms, regulators, trade associations, consumer groups, and a broad array of additional stakeholders. After following this deliberative, inclusive, and transparent process, CFP Board adopted the Code and Standards in March 2018 and announced that it would become effective on October 1, 2019.  (Originally Published:  November 27, 2018)

To make the Standards of Professional Conduct more user-friendly, the new Code and Standards consolidates the Terminology, Code of Ethics and Professional Responsibility, Rules of Conduct, and Financial Planning Practice Standards. In the Standards of Professional Conduct, each section had its own numbering and organizational system, the Rules of Conduct and the Practice Standards had overlapping provisions, and the Code of Ethics contained language explaining its principles. By consolidating these sections, CFP Board eliminated redundancy, developed a unified structure, and presented content in a more efficient and effective manner. Set forth below is a summary of the organizational structure of the new Code and Standards.

The new Code and Standards begins with a four-sentence Preamble that succinctly captures its purpose and effect. A concise Code of Ethics then identifies principles that guide the behavior of CFP® professionals. CFP Board elaborates on those principles in its Standards of Conduct, which is divided into the following six sections:

A. Duties Owed to Clients

B. Financial Planning and Application of the Practice Standards for the Financial Planning Process

C. Practice Standards for the Financial Planning Process

D. Duties Owed to Firms and Subordinates

E. Duties Owed to CFP Board

F. Prohibition on Circumvention

Section A of the Code and Standards delineates the following 15 duties that a CFP® professional owes to a Client:

• A.1 Fiduciary Duty
• A.2 Integrity
• A.3 Competence
• A.4 Diligence
• A.5 Disclose and Manage Conflicts of Interest
• A.6 Sound and Objective Professional Judgment
• A.7 Professionalism
• A.8 Comply with the Law
• A.9 Confidentiality and Privacy
• A.10 Provide Information to a Client
• A.11 Duties When Communicating with a Client
• A.12 Duties When Representing Compensation Method
• A.13 Duties When Recommending, Engaging, and Working with Additional Persons
• A.14 Duties When Selecting, Using, and Recommending Technology
• A.15 Refrain from Borrowing or Lending Money and Commingling Financial Assets

Section B of the Code and Standards addresses Financial Planning and Application of the Practice Standards for the Financial Planning Process. This section sets forth CFP Board’s revised definition of Financial Planning, the standard for when the Practice Standards apply, and the circumstance in which a CFP® professional must demonstrate that compliance with the Practice Standards was not required. This section also includes a standard that applies when a CFP® professional otherwise must comply with the Practice Standards, but the Client does not agree to engage the CFP® professional for Financial Planning.

Section C contains CFP Board’s Practice Standards for the Financial Planning Process, which have been revised to include seven steps:

1. Understanding the Client’s Personal and Financial Circumstances
2. Identifying and Selecting Goals
3. Analyzing the Client’s Current Course of Action and Potential Alternative Course(s) of Action
4. Developing the Financial Planning Recommendation(s)
5. Presenting the Financial Planning Recommendation(s)
6. Implementing the Financial Planning Recommendation(s)
7. Monitoring Progress and Updating

Section D of the Code and Standards sets forth the three Duties Owed to Firms and Subordinates:

1. Use Reasonable Care When Supervising
2. Comply with Lawful Objectives of CFP® Professional’s Firm
3. Provide Notice of Public Discipline

Among other changes in this section, the third standard includes a newly expanded requirement to advise the CFP® Professional’s Firm, in writing, of any public discipline imposed by CFP Board.

Section E sets forth the Duties Owed to CFP Board. This section preserves the current prohibition against engaging in conduct that reflects adversely on a CFP® professional’s integrity or fitness, upon the CFP® marks, or upon the profession. CFP Board identifies five types of conduct that CFP Board’s Disciplinary and Ethics Commission (DEC) has determined violate this standard. This section then delineates 14 reportable events for which a CFP® professional must provide written notice to CFP Board within 30 calendar days. Section E also requires a CFP® professional to provide CFP Board with a narrative statement describing the reportable matter.

CFP Board’s list of reportable events is similar to, but not the same as, the events that must be reported to the SEC and FINRA. Finally, a CFP® professional is required to cooperate with CFP Board and to comply with the Terms and Conditions of Certification and Trademark License.

Section F contains a Prohibition on Circumvention, which provides that a CFP® professional may not do indirectly, or through or by another person, any act or thing that the Code and Standards prohibits the CFP® professional from doing directly.

The Code and Standards concludes with a Glossary, which contains definitions of fourteen terms that appear in multiple sections of the document.

CFP Board has developed a Side-by-Side comparison document that compares the Standards of Professional Conduct, which applies through September 30, 2019, to the Code and Standards, which applies beginning on October 1, 2019.  (Originally Published:  November 27, 2018)

The new Code and Standards requires a CFP® professional to comply with the laws, rules, and regulations governing Professional Services and prohibits a CFP® professional from intentionally or recklessly participating or assisting in another person’s violations of the Code and Standards or the laws, rules, or regulations governing Professional Services. (See Standard A.9.) However, CFP® certification represents a commitment to a higher standard. While all practitioners must comply with the law, under certain circumstances, the Code and Standards may contain requirements that are in addition to those contained in existing laws or regulations. Therefore, compliance with the law does not always achieve compliance with CFP Board’s Code and Standards.  (Originally Published:  November 27, 2018)

No. The new Code and Standards applies to all CFP® professionals equally.  (Originally Published:  November 27, 2018)

Yes. A CFP® professional is obligated to abide by CFP Board’s new Code and Standards, irrespective of whether the CFP® marks appear on the CFP® professional’s business cards or stationery. Removal of the CFP® marks from one’s business cards or stationery does not relieve a CFP® professional of the obligation to follow the Code and Standards.  (Originally Published:  November 27, 2018)

No. CFP Board certifies individuals, not firms. As a condition of CFP® certification, CFP® professionals are required to abide by CFP Board’s new Code and Standards.  (Originally Published:  November 27, 2018)

CFP Board is a 501(c)(3) organization whose mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. CFP Board issues the CFP® certification to individuals (“CFP® professional”) who satisfy CFP Board’s certification requirements.

The Relationship Between CFP Board and a CFP® Professional: The relationship between CFP Board and each CFP® professional is governed by the Terms and Conditions of Certification and Trademark License. In the Terms and Conditions, CFP Board certifies a CFP® professional as having satisfied CFP Board’s requirements for certification (“Certification”), grants a CFP® professional a Trademark License to use the Certification Marks, and sets forth other provisions that govern the relationship between CFP Board and a CFP® professional, including the requirement that each CFP® professional comply with CFP Board’s Code of Ethics and Standards of Conduct, which has an effective date of October 1, 2019 and an enforcement date of June 30, 2020. The Code and Standards reflects the commitment that a CFP® professional makes to CFP Board. Among other things, the Code and Standards includes a Fiduciary Duty that requires a CFP® professional to act as a fiduciary, and therefore, act in the best interests of the Client, at all times when providing Financial Advice to a Client.

Therefore, a CFP® professional makes a commitment to CFP Board that, when providing Financial Advice to a Client, the CFP® professional will provide Professional Services that satisfy the Fiduciary Duty.

The Relationship Between CFP Board and a CFP® Professional’s Firm: CFP® professionals often work at financial services firms. CFP Board does not certify firms; therefore, the Code and Standards does not establish requirements for firms. However, CFP Board does expect that a CFP® Professional’s Firm will support CFP® certification and will allow a CFP® professional to comply with the Code and Standards.

The Relationship Between CFP Board and a CFP® Professional’s Firm’s Clients: A CFP® professional and the CFP® Professional’s Firm also have relationships with Clients. As noted above, the Code and Standards reflects the commitment that a CFP® professional makes to CFP Board. While a CFP® professional is required to comply with the Code and Standards, including the Fiduciary Duty, a CFP® professional and the CFP® Professional’s Firm are not required to incorporate the Fiduciary Duty into the Client Engagement or refer to the Fiduciary Duty in Client communications. As was the case with the prior Standards of Professional Conduct, the Code and Standards is not designed to be a basis for civil liability. Clients of a CFP® professional and other third parties are not intended to be considered third-party beneficiaries of a CFP® professional’s agreement with CFP Board to adhere to the Code and Standards. CFP Board enforces the Code and Standards through a peerreview process set forth in CFP Board’s Procedural Rules that is credible to the public and fair to those whose conduct CFP Board is evaluating. In the event CFP Board finds a violation of the Code and Standards and issues a public sanction, CFP Board will publish the decision in a press release and on CFP Board’s website.  (Originally Published: January 16, 2020)

Yes. A CFP® professional may satisfy CFP Board’s Fiduciary Duty when working in any business model, including when working as a registered representative of a broker dealer and earning Sales-Related Compensation. In those business models where CFP Board’s Fiduciary Duty exceeds the legal and regulatory requirements of that business model, a CFP® professional is required to satisfy CFP Board’s Fiduciary Duty, and therefore, exceed the applicable legal and regulatory requirements.  (Originally Published:  January 16, 2020)

CFP Board developed the new Code and Standards to be an enforceable set of requirements that CFP Board can apply to those who hold CFP® certification. It is not designed to be a basis for civil liability.

Clients of a CFP® professional and other third parties are not intended to be third-party beneficiaries of a CFP® professional’s agreement with CFP Board to adhere to the Code and Standards.  (Originally Published:  November 27, 2018)

CFP Board periodically updates the Standards to keep current with changes in the field of financial planning; to advance the profession; to maintain the value, integrity and relevance of the CFP® certification; and to address new products, services, and technologies that effect the profession. CFP Board last updated its Standards in 2007. The updates that become effective on October 1, 2019, include the introduction of the duty to act as a fiduciary at all times when providing Financial Advice to a Client. These revisions are consistent with, and central to, the purpose and mission of CFP Board.  (Originally Published:  November 27, 2018)