FPA Releases Standards about Role of Fiduciary Adviser

The Financial Planning Association released a Standard of Care, which clarifies the role of a fiduciary adviser in financial planning situations.

A press release said the standard clarifies the role of a fiduciary adviser under the Investment Advisers Act of 1940 and when providing material elements of financial planning services under the CFP Board’s recently revised Standards of Professional Conduct. The FPA said the Standard of Care was adopted by the FPA Board of Directors after receiving input earlier this year from members in response to recommendations made by the FPA Fiduciary Task Force in 2007.

The Standard of Care said all financial planning services should be delivered in accordance with the following standards:

  • put the client’s best interests first;
  • act with due care and in utmost good faith;
  • do not mislead clients;
  • provide full and fair disclosure of all material facts;
  • disclose and fairly manage all material conflicts of interest.

“In these turbulent times when consumers are often confused and frustrated in their search for ethical, objective, client-centered advice in the marketplace, the Standard of Care offers a clear and succinct guidepost to the public as to what it should expect from a financial planning professional,’ said Mark Johannessen, president of FPA, in the release. “The Standard of Care reflects FPA’s belief that those of us delivering financial planning services are fiduciaries, regardless of our business model, method of compensation, or professional designations.’

Earlier this year, FPA created a Best Practices Task Force that is developing additional guidance and interpretation for members on how to live to a fiduciary standard in a variety of financial planning situations. Task force recommendations are expected in December, prior to the effective date of CFP Board’s Rules of Professional Conduct on January 1, 2009, according to the release.