Eccleston Law: For Investors. For Advisors
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
Broker Transition
Transition Negotiations
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Contract Review
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
Securities Fraud
Breach of Fiduciary Duty
Negligent Investment Management
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact
Site Menu
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
For Advisors: Overview
Broker Transition
Broker Transition Overview
Transition Negotiations
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Contract Review
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
For Investors: Overview
Securities Fraud
Breach of Fiduciary Duty
Negligent Investment Management
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact

Compliance with CFP Board’s New Code of Ethics and Standards

Posted on September 6th, 2019 at 4:21 PM
Compliance with CFP Board’s New Code of Ethics and Standards

From the Desk of Jim Eccleston at Eccleston Law LLC:

When the CFP Board's new Code of Ethics and Standards of Conduct ("Code and Standards") takes effect on June 30, 2020, the CFP Board will expect 63,000 CFP professionals to act in the best interests of their clients at all times when providing an investor with "financial advice."

The new Code and Standards defines "financial advice" broadly, as any recommendation to purchase, hold, or sell any financial asset. According to the Commentary to the Code and Standards, financial advice includes "discretionary authority as well as communications that would be viewed as a recommendation that the client takes or refrains from taking a particular course of action with respect to a wide range of financial matters."

Accordingly, any recommendation by CFP professionals can subject them to the Code's fiduciary duty unless they provide an investor disclosure stating the professional is limiting the engagement to the transaction and not acting as a fiduciary or doing financial planning. However, advisors still may face claims filed by regulators and aggrieved investors since the new Code and Standards defines engagement as any "oral or written agreement, arrangement or understanding."

According to a recent Financial Advisor article, firms need to address the following issues:

  1. The specific fiduciary duties owed to a CFP's client, including the duty to avoid or fully disclose material conflicts of interest.
  2. Considerations for firms regarding how they should supervise the new standard.
  3. The enforcement of the new fiduciary standard.

In addition, CFP professionals have to satisfy a duty of loyalty and a duty of care, including an obligation to provide a significant amount of information, not required by the SEC's Regulation Best Interest ("Reg BI"). The requirements include an obligation to update client information, and an obligation to provide ongoing monitoring and updates to financial plans. Compliance with the SEC's Reg BI rules will not satisfy a CFP's fiduciary duties under the CFP Board's new rules.

To that end, the CFP Board will evaluate whether a reasonable client would have understood the conflict, and how it could affect the advice provided by the CFP, in determining whether disclosure of a material conflict of interest to a client is sufficient. The CFP Board has noted that it will interpret ambiguity in disclosures in favor of the client.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities Fraud, Compliance Protection, Breach of Fiduciary Duty, FINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today. 

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, cfp board, code of ethics, standards of conduct, certified financial planner

Share

Return to Archive

Latest Articles
FINRA Suspends Advisor Who Helped His Barred Father Service Clients
March 3rd, 2021 at 1:19 PM
J.P. Morgan Returns to Court to Block Former Advisor From Soliciting Clients
March 2nd, 2021 at 2:26 PM
Read More »
Latest News
CFP Board is the New Sheriff and it Is Not Your Friend
October 24th, 2020 at 10:04 AM
Defending Against a Customer Complaint First Requires Selecting Correct Legal Counsel
October 15th, 2020 at 10:02 AM
Read More »
Share

Request a Free Consultation

Attorneys are standing by during regular business hours. Call us now for immediate service, or complete the form below and we will contact you as soon as possible.

Your E-mail Address:
 
Chicago
55 West Monroe St.
Suite 610
Chicago, Illinois 60603
(312) 332-0000
(312) 332-0003
New York City
One Liberty Plaza
165 Broadway, 23rd Floor
New York, New York 10006
(312) 332-0000
(312) 332-0003
Boca Raton
2255 Glades Road
Suite 324A
Boca Raton, Florida 33431
(312) 332-0000
(312) 332-0003
2021 © Eccleston Law, LLC.
All Rights Reserved.
The law is continuously changing. Please do not rely on information found on this site without consulting a lawyer to determine if any recent changes in the law may have an impact.