CFP® Fiduciary Standard

Why work with a CFP®?

If you had a heart condition, would you go to a drugstore doctor or a cardiac specialist?

Just as one with a heart condition would rather seek a trained cardiac specialist with years of industry experience and technical expertise to diagnose their situation over a general practicioner, so it is with one’s financial health.

As CFP® Professionals we’ve undergone extensive and rigorous training and testing to be able to accurately diagnose your financial situation and only then prescribe and deploy appropriate tactics and strategies to help you retire successfully.

Our Client commitment

A deeper look into the CFP®

In the medical field, any doctor who would dare provide a prescription before (or in the absence of) an accurate diagnosis would be guilty of malpractice, and would likely not only lose his job, but end up in jail and may perhaps kill somebody. 

While there are many laws and regulations in place to prevent this from happening in the medical field, sadly, the same cannot be said for the financial services industry as a whole.

the bare minimum

The Suitability Standard

Many other advisors (who do not hold the CFP® designation) are held to what is referred to as “the suitability standard”, meaning the only legal obligation they have is to recommend a product “suitable” for your needs on the date the recommendation was made… meaning there is little that can be done legally if that “investment” (often sold on commission) turned out to be nothing more than a sales pitch. 

In other words, as long as that investment was deemed “suitable” on the date of purchase, that could turn out to be the worst advice in the world and there’s nothing you can do… legally speaking.

That would be akin to a doctor prescribing a “suitable” drug with complete and utter disregard for the unique aspects of his or her patients health and facing no legal repercussions.

While this is a detestable practice, (and sadly not unheard-of among non-CFP®s) there is a better way to plan for your future. Enter, the CFP®. 

the Higher law

The Fiduciary, CFP® Standard

Unlike some other financial advisors, fiduciary planners holding the CFP® designation are both intrinsically motivated and legally obligated to put your financial best interests ahead of our own. 

Practically speaking, this means we are barred from recommending or brokering a financial product for a client simply because it pays us a high commission. 

To continue with the medical analogy, CFP®s are the ethically-bound specialists in a sea of general practitioners. 

Whether you choose to speak to us or another advisor, we strongly recommend you only work with those advisors holding the CFP® designation to ensure you receive the best diagnosis and treatment possible for your financial situation. 

Our advice

What to do next?

Whether you choose to speak to us or another advisor, our advice remains steadfast: We strongly recommend you only work with those advisors holding the CFP® designation. This is to ensure you receive the best advice possible and steer clear of financial malpractice.

If you’re looking to speak with an expert, CFP® professional with decades of experience, you may schedule a quick, 15-minute call with us to discuss your situation.

Frequently Asked Questions

The new Code and Standards sets forth an objective standard requiring a CFP® professional providing Financial Advice to act in the best interests of the Client. In order to act in the best interests of the Client, a CFP® professional must fulfill a Duty of Loyalty, a Duty of Care, and a Duty to Follow Client Instructions. Standard A.1 of the new Code and Standards defines each of these duties using language that was drawn from the common law of fiduciaries.

The Duty of Loyalty requires a CFP® professional to:

i. Place the interests of the Client above the interests of the CFP® professional and the CFP® Professional’s Firm;

ii. Avoid Conflicts of Interest, or fully disclose Material Conflicts of Interest to the Client, obtain the Client’s informed consent, and properly manage the conflict; and

iii. Act without regard to the financial or other interests of the CFP® professional, the CFP® Professional’s Firm, or any other individual or entity other than the Client, which means that a CFP® professional acting under a Conflict of Interest continues to have a duty to act in the best interests of the Client and place the Client’s interests above the CFP® professional’s.

Disclosure of Material Conflicts of Interest by itself is not sufficient to fulfill the Duty of Loyalty.

The Duty of Care requires a CFP® professional to act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the Client’s goals, risk tolerance, objectives, and financial and personal circumstances.

The Duty to Follow Client Instructions requires a CFP® professional to comply with all objectives, policies, restrictions, and other terms of the Engagement and all reasonable and lawful directions of the Client.  (Originally Published:  November 27, 2018 on the CFP® Website)

A CFP® professional has a Duty to Provide Information to a Client. Whether the information may be provided orally or must be provided in writing depends upon whether the Financial Advice that the CFP® professional is providing requires Financial Planning.

There are eight categories of information that a CFP® professional is required to provide to a Client when providing Financial Advice. There is an additional category of information that a CFP® professional must provide to a Client when providing or required to provide Financial Planning in accordance with the Practice Standards. (Standard A.10.) The requirement to provide information to a Client set forth in CFP Board’s Code and Standards is in addition to any requirements that apply under applicable law, rule, or regulation and the CFP® Professional’s Firm’s policies and procedures.

When Providing Financial Advice: When providing Financial Advice, a CFP® professional is required to provide the following information to the Client: 

  1. A description of the services and products to be provided;
  2. How the Client pays for the products and services, and a description of the additional types of costs that the Client may incur, including product management fees, surrender charges, and sales loads;
  3. How the CFP® professional, the CFP® Professional’s Firm, and any Related Party are compensated for providing the products and services;
  4. The existence of any public discipline or bankruptcy, and the location(s), if any, of the webpages of all relevant public websites of any governmental authority, self-regulatory organization, or professional organization that sets forth the CFP® professional’s public disciplinary history or any personal bankruptcy or business bankruptcy where the CFP® professional was a Control Person;
  5. Full disclosure of all Material Conflicts of Interest with the CFP® professional’s Client that could affect the professional relationship (a CFP® professional also must obtain the Client’s informed consent and adopt and follow business practices reasonably designed to prevent Material Conflicts of Interest from compromising the CFP® professional’s ability to act in the Client’s best interests);
  6. Written notice of policies regarding the protection, handling, and sharing of a client’s non-public personal information (Privacy Policies);
  7. Any arrangement by which someone who is not the Client will compensate or provide some other material economic benefit to the CFP® professional, the CFP® Professional’s Firm, or a Related Party for engaging or recommending the selection or retention of additional persons to provide financial or Professional Services for a Client; and
  8. Any other information about the CFP® professional or the CFP® Professional’s Firm that is Material to a Client’s decision to engage or continue to engage the CFP® professional or the CFP® Professional’s Firm.

When Providing Financial Planning: When providing or required to provide Financial Planning in accordance with the Practice Standards, in addition to the information described above, a CFP® professional must provide to the Client the terms of the Engagement between the Client and the CFP® professional or the CFP® Professional’s Firm. The terms of the Engagement include the Scope of Engagement and any limitations, the period(s) during which the services will be provided, and the Client’s responsibilities. (Note that a CFP® professional is responsible for implementing, monitoring, and updating the Financial Planning recommendation(s) unless specifically excluded from the Scope of Engagement.) 

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and it pays to do it right the first time.

If you’re looking for the friendly assistance of someone who has seen it all through helping hundreds of individuals and families retire over 30+ years, we would invite you to schedule a quick, 15-minute discovery phone call with us.