OVERVIEW

1
OVERVIEW

• Proposed Code of Ethics and Rules of Conduct
• CFP Board Annual Meeting 2006

2
Exposure Draft

• The Code of Ethics and Rules of Conduct were
  released in what is known as an Exposure Draft
  for comment on July 24.
• Several organizations have been invited to
  provide initial verbal comments at the August 5,
  2006, public Board of Governors meeting in Santa
  Monica.

3
Exposure Draft (cont.)

• There is a 60 day comment period.
• Written comments should be submitted to by CFP
  Board no later than by September 25, 2006.
• Comments will be compiled by staff and shared
  with the Board of Governors.

4
Written Comments

• CFP Board
• c/o Tim Stifel
• 1670 Broadway, Suite 600
• Denver, CO 80202-4809
• e-mail mail_at_CFPBoard.org
• Fax [phone]

5
Why the Change?

• The Board of Governors undertakes annually an
  evaluation of the core operations
• Ethics (2005)
• Education (2006)
• Exam
• Experience
• Culmination of Ethics review that began in 2005.

6
Why the Change? (cont.)

• A committee was already formed of CFP
  certificants reviewing the Code and Practice
  Standards in 2004.
• Board of Professional Review identified some
  challenges in applying the Practice Standards to
  specific cases.

7
Challenges Faced by Drafters

• Clearing out repetitive and conflicting language.
• Closing loopholes that made the Practice
  Standards hard to enforce.
• Clarifying whether the Code of Ethics was
  aspirational or binding.
• Reordering the content so it tracks the process
  clients and certificants usually follow.

8
Challenges Faced by Drafters (cont.)

• Making the Practice Standards apply to all
  individuals over whom CFP Board has authority and
  responsibility.
• Changing the name so it more accurately reflects
  what it does Rules of Conduct
• Keeping the content but reorganizing it.

9
What Will You No Longer Find?

• Standards that govern behavior over which CFP
  Board has no authority.
• No mandatory report on thy neighbor rule
• No mandatory requirement to maintain the
  professions public image
• No statement regulating how CFP certificants
  must behave with regard to other professional
  certifications.

10
What Will You No Longer Find? (cont.)

• Any provisions that conflict with the premise
  that a certificant and his/her client will
  mutually define the scope of the engagement.

11
What Will You Find?

• A written contractual agreement will be required
  between a CFP certificant and a client.
• A short list of basic terms that must be
  addressed in the writing are included in the
  Rules.
• A separate list of subjects which certificants
  are encouraged to address as appropriate.

12
What Will You Find? (cont.)

• That clients be provided with a description of
  the ways in which the CFP certificant may be
  compensated under the agreement

13
What Will You Find? (cont.)

• That the CFP certificant must provide
  professional supervision or direction to third
  parties to whom they have delegated
  responsibility for client services.
• That the CFP certificant will provide reasonable
  electronic security to keep clients information
  secure.

14
What has been added? (cont.)

• That the parties should specify in the written
  agreement the legal standard to apply. If none
  is stated, then the
• FIDUCIARY
• standard of care will be applied.

15
What has been added? (cont.)

• Fiduciary definition
• In good faith, with the care an ordinarily
  prudent person in a like position would exercise
  under similar circumstances and in a manner he
  or she reasonably believes to be in the best
  interests of the client.

16
What is Next?

• Best Practices Standards
• Character Fitness Standards for Candidates
• Sanctions Guidelines

17
Written comments may be sent to

• CFP Board
• c/o Tim Stifel
• 1670 Broadway, Suite 600
• Denver, CO 80202-4809
• e-mail mail_at_CFPBoard.org
• Fax [phone]

18
OVERVIEW ofThe Proposed Code of Ethics and
Rules of Conduct

• Certified Financial Planner Board of Standards
  Inc. owns the certification marks CFP, CERTIFIED
  FINANCIAL PLANNER and federally registered CFP
  (with flame logo) in the U.S., which it awards to
  individuals who successfully complete initial and
  ongoing certification requirements.