Summer 2020 Quarterly Newsletter
Author: Mark Dillon, CFP®
The CERTIFIED FINANCIAL PLANNER™ certification is the standard of excellence in financial planning. CFP® professionals meet rigorous education, training and ethical standards and are committed and obligated to serving their clients’ best interest. We have no less than 25 CFP® professionals at Carroll Financial and many more are in the process of acquiring the designation as I write this.
Prior to June 30th of this year, CFP® professionals were required to act as a fiduciary when providing only financial planning to their clients. Under the newly revised standards, all CFP® professionals providing any type of financial advice are required to act as a fiduciary and thus in the best interest of the client at all times, not just when the advisor is providing financial planning. This requirement applies regardless of whether an advisor is paid through a management fee or commissions.
When providing or agreeing to provide financial advice that does not require financial planning in accordance with the practice standards, a CFP® professional must provide the following information to the client prior to or at the time of the engagement and document that the information has been provided to the client:
- A description of the services and products to be provided
- 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
- How the CFP® professional, the CFP® professional’s firm and any related party are compensated for providing the products and services
- The existence of any public discipline or bankruptcy and the location(s), if any, of the web pages 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
- Conflict of interest disclosure
- Written notice regarding nonpublic personal information
- Disclosure of economic benefit for referral or engagement of additional persons
- 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
The standards set forth the following duties to be fulfilled by fiduciaries:
- Duty of loyalty
- Duty of care
- Duty to follow client instructions
We have always exercised these duties at Carroll Financial ever since Larry founded the firm 40 years ago. About the only thing that has changed for us with these new standards is that we now have to ask potential clients to sign a disclosure form spelling out what we have been practicing since 1980.
This article was featured in our Summer 2020 Quarterly Newsletter available here:Carroll Financial, Financial Literacy, Quarterly Newsletter