CFP® Code of Ethics

The CFP® Board of Standards has issued new rules related to the Code of Ethics & Standards of Conduct with an effective date of October 1, 2019, but they have pushed the actual implementation to coincide with Regulation Best Interest on June 30, 2020. The CFP® Code of Ethics only applies to CFP®s, however it could apply to your firm if you have CFP®s under supervision. Therefore, if you are the owner of an RIA firm and not a CFP® yourself, but you have one or more CFP®s on staff, then your Chief Compliance Officer will need to make sure that your CFP®s are in compliance with these new rules.

The CFP® Board has published a Roadmap, located here. This Roadmap lays out the different ways to comply with these new rules. They have two major requirements as far as disclosure is concerned. These two requirements revolve around whether or not the advice includes financial planning. If it does not include financial planning, then there are disclosure requirements for those instances. If it does include financial planning, then there are disclosure requirements for those situations.

You may want to give some thought as to how you or your firm will disclose this information to clients. Your current busines model matters in this situation. For example, if at your firm, you include a financial plan to all clients, then your disclosures will fit the requirement related to "with financial planning." If on the other hand, you only offer financial planning to those who pay a separate fee, then you will need disclosures for both "with" and "without" financial planning. Each firm is different and your business model will tell you what disclosures you need. If you do not have any CFP®s, then you do not need to comply with these new rules. However, you must be aware of these rules in case you hire a CFP® in the future.