The Certified Financial Planning Board already enacts a fiduciary standard on their advisers, but they’re taking it a step further by demanding further fee and conflict of interest transparency.
These new standards require more fiduciary culpabilities for advisers who have CFP credentials. The standards would mean stringently defining terms like “sales-related compensation.” While the industry generally views fee-only advisers as having less of a conflict of interest than those who work on commission, the CFP points out that every business model includes potential conflicts – including fee-only advisers.
Kevin Keller, CFP Board CEO, points out that a fee-based adviser who earns from a percentage of AUM may have a conflict of interest if the client wants to shuffle money to investments that the adviser doesn’t oversee.
Another term under fire? “Professional services,” which the CFP board defines as “‘financial advice and services including financial planning, legal, accounting or business planning services.'”
The CFP board has a checklist outlining which activities translate into financial advice.
These new standards are but another global trend – particularly hot in the US – to increase transparency the adviser accountability.
The CFP’s standards can be viewed here.
