Standards of a CFP® Professional
Standards of a CFP® Professional
Codes and Standards
CFP Board’s Code of Ethics and Standards of Conduct reflects the commitment that all CFP® professionals make to high standards of competency and ethics. The Code of Ethics applies at all times, and sets forth principles that guide the behavior of CFP® professionals, with elaboration provided in the Standards that follow. The cornerstone of the Code and Standards is a CFP® professional’s duty to act as a fiduciary and, therefore, act in the best interests of the client at all times when providing Financial Advice.
CODE OF ETHICS
A CFP® professional must:
Act with honesty, integrity, competence, and diligence.
Act in the client’s best interests.
Exercise due care.
Avoid or disclose and manage conflicts of interest.
Maintain the confidentiality and protect the privacy of client information.
Act in a manner that reflects positively on the financial planning profession and CFP® certification.
The Fiduciary Duty
Fiduciary Duty =
Duty of Loyalty +
Duty of Care +
Duty to Follow
Duty of Loyalty
A CFP® professional must:
1. Place the interests of the Client above the interests of the CFP® professional and the CFP® Professional’s Firm;
2. 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
3. Act without regard to the financial or other interests of the CFP® professional, the CFP® Professional’s Firm, or any 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.
Duty of Care
A CFP® professional must 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.
Duty to Follow
A CFP® professional must comply with the terms of the Client engagement and follow all directions of the Client that are reasonable and lawful.