Harold Evensky and Deena Katz are working to emphasize the clients’ interests.
On Thursday (March 29), The Committee for the Fiduciary Standard announced that CFP Board, the nonprofit organization behind the Certified Financial Planner (CFP®) certification, has revised its Code of Ethics and Standards of Conduct to put the fiduciary standard front and center.
Harold Evensky, CFP®, and Deena Katz, CFP®, both faculty members in Texas Tech's Department of Personal Financial Planning, are members of the steering group for The Committee for the Fiduciary Standard.
“About 10 years ago, a small, like-minded group of practitioners, frustrated with the confusing and misleading standards for financial professionals and the lack of regulatory enforcement of existing standards, joined together to encourage the adoption and enforcement of a true fiduciary standard for anyone – broker, insurance agent, accountant or financial planner – providing financial advice to the public,” said Evensky, a former CFP Board chairman.
“Over the years, we've prepared white papers and visited regulators and Congressmen and women on many occasions. The efforts have been all voluntary, funded by the participants with no outside funding. While we've generally been courteously received, competing with the massive financial resources of the financial services lobby has been a classic David-and-Goliath story with Goliath winning.”
Two recent focuses have helped make a difference. The first was the creation of the Fiduciary Oath, through which an adviser promises to put the clients' interests first, act with prudence, not mislead clients, avoid conflicts of interest and disclose and manage any unavoidable conflicts.
“Recognizing that, realistically, Congress and regulators may not do anything, we believe individual investors should take control to protect themselves; hence the oath,” Evensky said. “If the adviser signs the oath, should a problem arise, the client will have a strong written document denoting the adviser's fiduciary responsibility. Although the oath describes a fiduciary relationship, it does not use that contentious term. It's a simple mom-and-pop statement. We believe if an adviser refuses to sign, that is a huge red flag and a client would be wise to look elsewhere.”
The second focus has been a push for regulators to dictate the use of financial advisers' titles. Under these proposed regulations, individuals wishing to work under the brokerage suitability standards would only use titles clearly indicating a sales relationship, such as stock broker, and only those prepared to be held to the more stringent fiduciary standard would be allowed to use titles such as adviser, planner or wealth manager.
“Although our steering group is composed of only a handful of professionals, each member is well known and respected nationally, so we've been successful in receiving significant professional and public media attention that we believe helps move the regulatory process in a fiduciary direction,” Evensky said. “At a minimum, we know the public has become much more aware of the issue.”
The CFP Board's revised Code of Ethics and Standards of Conduct will take effect Oct. 1, 2019.
About CFP Board
CFP Board is a nonprofit organization that fosters professional standards in personal financial planning by setting and enforcing the education, examination, experience, ethics and other requirements for CFP® certification.