Raising the Bar: Building Trust and Protecting Clients Through Standards Enforcement

Journal of Financial Planning: November 2019



Kevin R. Keller, CAE, is the chief executive officer of CFP Board.

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Trust is central to a successful financial planning relationship. The families and individuals CFP® professionals serve look to their financial advisers for competent advice to help them take control of their financial future. They rely on their financial advisers for help setting short- and long-term goals. And they want to be confident that the recommendations provided by an adviser can guide their financial decisions.

The accountability of a financial adviser is important to earning and maintaining this trust. When a client knows their adviser takes his or her professional obligations seriously and places ethical principles over personal gain, a good, working partnership can be formed—one that best serves the client’s needs.

Federal regulations, state laws, and employer policies set a baseline of accountability in personal financial planning. But the setting and enforcement of professional standards provides further client assurances that help grow the trust that exists between a client and their financial adviser.

Since its foundation in 1985, CFP Board has worked to establish and enforce the education, examination, experience, and ethics standards for CERTIFIED FINANCIAL PLANNERTM professionals. Our mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.

Our existing ethical and practice standards—as well as the Code of Ethics and Standards of Conduct (which went into effect Oct. 1)—serve as a foundation for CFP® certification. With the new Code and Standards, CFP® professionals commit to providing fiduciary-level financial advice to clients. This raises the standard not only for CFP® certification but also for financial planning and financial advice. Most importantly, it provides the public with the confidence that their CFP® professional is trained, tested, and committed to doing what’s right for them.

Understanding CFP Board’s Enforcement Program

CFP Board’s enforcement program investigates and adjudicates alleged misconduct by CFP® professionals. It is crucial to maintaining the credential’s value for the public, advisory firms, and stakeholders alike.

Our program begins with a background check for all candidates for CFP® certification. As part of this, we check the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck tool or the Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) database for information about an individual’s professional background and conduct. We also check for criminal matters, civil litigation, liens and judgments, and bankruptcies. Those whose past conduct falls short of our standards can be barred from becoming certified.

Once certified, a CFP® professional who violates our ethical and practice standards may become subject to disciplinary action up to the permanent revocation of certification. Those who believe a CFP® professional has engaged in misconduct may submit a complaint to CFP Board’s professional standards and legal department, which follows our disciplinary rules and procedures to investigate the alleged violation.

The disciplinary process begins with CFP Board’s legal counsel reviewing the allegations to determine if further investigation is warranted. If counsel decides to proceed, the CFP® professional involved in the complaint is given notice of the investigation and asked to provide a written response. If, at the end of the investigation, our counsel finds probable cause to believe that grounds for discipline exist, CFP Board files a formal complaint against the CFP® professional.

At this point, the CFP® professional has the right to a hearing before a panel, during which he or she may present evidence on their behalf. The hearing panel includes at least two CFP® professionals, and a majority of the hearing panel are members of CFP Board’s Disciplinary and Ethics Commission, also known as the DEC. Today, the DEC includes members of the public as well as CFP® professionals who are committed to ensuring a fair—but tough—process. The public members provide an important perspective that supplements the peer review provided by the DEC’s CFP® professionals.

Following the hearing, the panel submits its findings to the full DEC to review and render a final decision. If the DEC determines the CFP® professional should be disciplined, it may impose private written censure, a public letter of admonition, a temporary suspension of the individual’s CFP® certification, or a permanent revocation of the individual’s CFP® certification. The panel’s decision depends on the severity of the breach, any mitigating or aggravating circumstances, and the CFP® professional’s cooperation with CFP Board’s investigation. Apart from private censure, each of these disciplinary actions is publicly announced by CFP Board in a press release. The CFP® professional has the right to petition the decision to CFP Board’s appeals committee, composed of members of our board of directors.

An Active Process

This enforcement process is consistent, fair for to the certificant, and credible to the public. It is also active. In each of the past three years, we conducted an average of 6,900 background checks for candidates for CFP® certification, CFP® professionals, and those seeking to reinstate their certification. Over the last 10 years, CFP Board opened ethics investigations into the conduct of 7,392 individuals. And CFP Board has taken more than 1,000 public enforcement actions against CFP® professionals in its 30-plus year history.

Among the 208 financial services certifications and designations FINRA has identified in the United States, we are not aware of any other certification or designation that has the same level of enforcement efforts. We are proud of our enforcement program, especially given that CFP Board has accomplished all this without the support of government funding, the ability to require financial services firms to provide documents or information, or subpoena power.

Yet we understand the importance of continually evolving and strengthening our enforcement processes for the public’s benefit. We have, for example, revised our methodology for opening cases, which has streamlined our investigative process and better enabled us to focus on substantive allegations. We have also augmented the written notices of investigation and requests for relevant information we send to CFP® professionals, in addition to providing them more detailed complaints. This has resulted in fewer DEC hearings, as professionals more frequently opted to relinquish their certification rather than appear for adjudication.

This summer, CFP Board took additional steps with respect to our enforcement process. These steps include no longer relying primarily on self-disclosure once an individual becomes certified; reviewing BrokerCheck and IAPD for relevant information each time a CFP® professional renews their certification; and providing consumers with access to BrokerCheck and IAPD information on LetsMakeaPlan.org​ and CFP.net/verify.

But our efforts do not end there. We have reached out to other organizations, such as FINRA, to cooperate on enforcement activity. We also have established an independent task force to examine our existing enforcement program and make actionable recommendations for improvement. Chaired by Denise Voigt Crawford, a securities consultant and expert who previously served as the Texas Securities Commissioner for 17 years, the task force appointed its own members and will make its recommendations public.

Our new Code and Standards and this independent task force come at a time when the advisory landscape is evolving to better serve Americans’ financial needs. The future of financial advice requires a financial planning profession that is willing to set high standards and uphold them through enforcement.

CFP Board is committed to continuous improvement to give consumers the lasting confidence that comes from receiving competent, ethical financial planning. As the standard-setting organization for financial planners, CFP Board is accountable to the public. And CFP® professionals are accountable to CFP Board. Together we are raising the bar for personal financial planning and working to maintain the trust of the public we serve.  

Professional Conduct & Regulation