FPA to CFP Board: Delay enforcing the new standards
The CFP Board got a vote of renewed confidence for its new professional standards and perhaps a way to relieve pressure from brokerages who take umbrage over requirements of an expanded fiduciary duties.
The FPA suggested the board delay, but not abandon enforcement of its new standards of professional conduct — a course of action the CFP Board’s leadership is set to consider this month.
“We feel a little extra time would be helpful,” Evelyn Zohlen, 2019 FPA president, tells Financial Planning.
The new standards, set to go into effect Oct. 1, would impose a stricter fiduciary duty on CFP professionals than the current standards and have drawn criticism from the brokerage industry, which has generally opposed fiduciary rules proposed by federal and state regulators.
In a July 8 letter to the CFP Board, the FPA reiterated its support of the standards. But delaying enforcement until June 30, 2020, would permit advisors more time to prepare their compliance processes, the association suggested. The FPA pointed to the burden CFP professionals face in complying with both the board’s new standards and the SEC’s recently approved Regulation Best Interest.
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“We believe this is right for our CFP professional members, the financial planning profession, and the public,” the association said, noting that delaying enforcement would not prevent the standards from taking effect later this year.
Reg BI is intended to update standards of conduct for brokers and advisors, runs more than 700 pages and takes effect next year. SEC Chairman Jay Clayton, who promises strict enforcement of the regulation, has faced criticism that it falls short of needed investor protections. Wall Street has generally given it a warmer reception than it did the Department of Labor’s now-vacated fiduciary rule.
Zohlen says that the association’s support for the CFP Board’s new standards remains unwavering. But advisors have their hands full with regulatory changes.
“We are still parsing [Reg BI] and how the details apply to our members,” Zohlen says.
The FPA’s membership includes RIAs as well as advisors at broker-dealers. The association has long advocated for a business model neutral approach to crafting a uniform fiduciary rule.