CFP Board office.

FPA and CFP Board Formalize Collaboration

Two industry groups plan to better leverage each other for their causes.

The Financial Planning Association and the Certified Financial Planner Board of Standards have announced a formal collaboration, the start of an effort to better leverage each other for the benefit of the financial advice industry.

Leadership from both groups attended the FPA’s annual conference in Nashville last week where they made announcement. FPA President Shannon Pike said the organizations have long had a relationship and that it made sense to outwardly support each other’s aligning causes.

“We do believe that all CFPs should be members of the financial planning organization,” FPA Executive Director and CEO Lauren Schadle said. There are just under 79,000 individuals with CFP certificates and about 23,000 FPA members.

The CFP Board has been working to grow the number professionals with its certification and proposed changes to its Standards of Professional Conduct this year. Those changes, expected to be voted on before the end of the year, happen to overlap the Department of Labor's so-called fiduciary rule was was recently delayed 18 months. Under the current standard, fiduciary duty applies when providing financial planning. But under the revised standard, fiduciary duty also applies when providing financial advice.

“In many respects, it’s the equivalent here of saying that a CFP professional must at all times act as fiduciary,” Leo Rydzewski, the CFP Board’s general counsel, said in June.

The FPA is in favor of a universal standard for advisors when interacting with clients and the board was not happy the implementation of the fiduciary rule's delay. However, it is also in favor of and believes there is a need for certifications (like the CFP Board’s) and other means—such as a “decision tree”—to help investors choose the right advisor. For example, an advisor might not have a CFP certification or as many years of experience as another, but they might have expertise in specific needs critical to an investor's financial plan.

The association's board of directors had discussed potential consequences of outwardly supporting and encouraging advisors to obtain CFP certification, which not all of its members have. But any risk of alienating some FPA members for the betterment of investors and the industry was a consequence worth facing, he said.

He also said the financial advice industry can do itself a favor and broaden the fiduciary conversation beyond the narratives about compensation.

“No matter how you get paid, that does not equate to any level of competence or ethics,” Shannon said. “There’s no such thing as no conflicts of interest. ...The mere fact that [advisors] get compensated is a conflict of interest.”

The FPA met with Securities and Exchange Commission lawmakers this summer to discuss a fiduciary rule and the CFP Board has meetings scheduled with both the DOL and SEC before the end of the year.

Meanwhile, the Securities Industry and Financial Markets Association testified Oct. 6 before the Nevada securities regulators that they should forgo rule-making which would create a fiduciary rule in the state.

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