January 31, 2018

Via Email to: [email protected]

Certified Financial Planner Board of Standards, Inc.
1425 K Street, NW
Suite 800
Washington DC 20005

Re: SIFMA comment re: CFP Board’s Revised Proposed Standards of Conduct

Dear Sirs / Madam:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the CFP Board’s Revised Proposed Standards of Conduct (the “Revised Proposal”).2 As we stated in our initial comment letter on the CFP Board’s Initial Proposed Standards of Conduct, we share the CFP Board’s interest in ensuring that financial advisors act in the best interest of their customers.3

The Revised Proposal includes a few changes but fails to address our members’ most significant concerns. As a threshold matter, the CFP Board has repeatedly stated that it endeavors to be an organization that is “business model neutral” by giving due consideration to the different business models that employ or contract with CFP certificants.4 The substance and timing of the CFP Board’s proposed changes, however, contradict that assertion.

The Revised Proposal removes the rebuttable presumption that the Practice Standards for the Financial Planning Process apply.5 In doing so, the Revised Proposal recognizes that not all
Financial Advice entails financial planning that requires application of the Practice Standards. Rather, only Financial Advice that incorporates Financial Planning would require application of the Practice Standards.

Notwithstanding the removal of the rebuttable presumption, however, the Revised Proposal continues to require that the Practice Standards apply whenever a CFP certificant provides (i) Financial Planning, or (ii) Financial Advice “that requires integration of relevant elements of the client’s personal and/or financial circumstances in order to act in the client’s best interest.” This remains a considerable overreach.

With respect to the first prong above, the Revised Proposal continues to define the term Financial Planning in an unacceptably vague and overbroad manner, as follows: “a collaborative
process that helps maximize a client’s potential for meeting life goals through Financial Advice that integrates relevant elements of the client’s personal and financial circumstances.” The
proposed definition would essentially sweep all personalized investment advice and broker recommendations within its scope, and thereby eliminate financial planning as a separate and
distinct function, as the CFP Board, the financial planning profession, and regulators, among many others, have always historically defined it to be. Far from protecting investors, this
eliminates investor choice when it comes to selecting a financial advisor. A CFP certificant would be forced to provide, and perhaps even charge for, additional financial planning activities
even if the customer only wants and requires investment recommendations or investment management services.

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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 CFP Board’s Revised Proposed Standards of Conduct (December 20, 2017), available at https://www.cfp.net/docs/default-source/for-cfp-pros—professional-standards-enforcement/2017-proposedstandards/CFPBoard_Revised_Proposed_Standards.

3 SIFMA comment letter to CFP Board dated August 21, 2017 (the “Initial Comment”), available at https://www.sifma.org/resources/submissions/proposed-revisions-to-cfp-boards-standards-of-professional-conduct/.

4 See, e.g., Certified Financial Planners Reveal How They are Paid, TheStreet.com (Oct. 16, 2013) (“CFP Board is business and compensation model neutral”), available at https://www.thestreet.com/story/12793799/1/certifiedfinancial-planners-reveal-how-they-are-paid.html.

5 Italicized terms in this comment letter are either defined terms or terms of art in the proposed CFP Board standards.