August 21, 2017

Via Email to: [email protected]
Certified Financial Planner Board of Standards, Inc.
1425 K Street, NW
Suite 800
Washington DC 20005

Re: Proposed Revisions to CFP Board’s Standards of Professional Conduct

Dear Sirs / Madam:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the CFP Board’s Proposed Revisions to its Standards of Professional Conduct (the “Proposal”). 2 SIFMA and its members share the CFP Board’s interest in maintaining high conduct standards for our profession and ensuring that all financial advisors – regardless of whether they hold the CFP designation – act in the best interest of their customers. As recently as last month, SIFMA filed a comment letter with the SEC recommending that it: (i) establish a best interest standard for broker-dealers (“BDs”) that encompasses a duty of loyalty, a duty of care, and enhanced up-front disclosures to investors, and (ii) closely coordinate its efforts with the Department of Labor (“DOL”) to ensure that the conduct standards for BDs remain high, consistent, and harmonized across all regulatory regimes.3

While we believe the Proposal is well-intentioned, SIFMA and its members share significant concerns about numerous aspects of the Proposal. First, registered investment advisers (“RIAs”) and BDs are already subject to extensive regulation and high conduct standards by the SEC, DOL, and FINRA, among others. The Proposal would duplicate, conflict with, and/or impose obligations in addition to, existing federal agency and SEC-approved rules governing the advisory activities of RIAs and BDs.

More specifically, the proposed standards would create different substantive duties – to the same client, in the same account, based on the exact same advice – depending solely upon the CFP status of the financial advisor. Because the Proposal imposes numerous requirements (including the CFP Fiduciary 4 standard and the Practice Standards, 5 among others), firms would face the choice of either applying the new CFP standards to all advice given by all financial advisors, or creating distinct advice regimes depending on the financial advisor’s CFP status. In either case, it would require a significantly expensive, burdensome, and time-consuming undertaking by firms to accommodate the Proposal’s hopefully unintended, complete reengineering of the regulatory regime. It would also result in greater investor confusion by layering on yet another differing standard of conduct – especially since such standard would be triggered not by the account type or services selected by the investor, but by the CFP status of the individual servicing the account.

We also take issue with the CFP Board’s assertion in recent public forums that the Proposal is “business model neutral.” The Proposal will clearly have a disproportionate, negative impact on CFP professionals who are BDs (who are not now subject to a regulatory fiduciary standard), as compared to RIA (who are). The Proposal will likewise have a disproportionate, negative impact on large, dually-registered, full service firms that offer a variety of brokerage and advisory products and services, as compared to smaller, financial planning only or investment adviser only firms.

Accordingly, in order to appropriately recognize the existing, robust regulatory regime, and to ameliorate the disproportionate impact of the Proposal, we recommend that the Proposal be modified to provide that if a CFP professional complies with his or her BD and/or RIA employer firm’s policies and procedures, then such CFP professional shall be deemed to be in compliance with the new proposed standards.

Another significant concern with the Proposal is its timing. As explained in SIFMA’s recent comment letter, 6 there is currently a concerted, bilateral, ongoing effort between the SEC and DOL to restore consistency, clarity and uniformity to the securities regulatory regime. Now is not an opportune time to introduce into the mix yet another set of new standards, adding to the confusion of both financial advisors and their clients. Thus, there is good reason to delay the Proposal pending the outcome of SEC/DOL coordination, and that is what we recommend.

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1 SIFMA is the voice of the U.S. securities industry. We represent the broker-dealers, banks and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the U.S., serving clients with over $18.5 trillion in assets and managing more than $67 trillion in assets for individual and institutional clients including mutual funds and retirement plans. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 Proposed Revisions to CFP Board’s Standards of Professional Conduct (June 20, 2017), available at https://www.cfp.net/about-cfp-board/proposed-standards#resources.

3 SIFMA comment letter to SEC re: Standards of Conduct for Investment Advisers and Broker-Dealers (July 21, 2017), available at http://www.sifma.org/issues/item.aspx?id=8589968054.

4 See infra footnote 10. Note: Terms that are italicized in this comment letter are either defined terms, or terms of art, under the proposed CFP standards.

5 See infra page 12.

6 See supra footnote 3 and accompanying text.