Who Do You Trust?

The Certified Financial Planner Board of Standards has now bolstered its ethical standards for financial planners who can use its CFP certification designation. The intent is to get the American consumer to the point of trusting that their financial planners who have this particular mark will be placing the clients’ interests well ahead of their own.   According to Karen Schaeffer, who chairs the CFP’s Board of Directors, the demand for financial planning is high and growing. “Each day millions of Americans must make important financial decisions, from Baby Boomers on the verge of retirement to the younger generations looking for ways to build their nest eggs.”   She adds, “As company-sponsored pensions are being replaced by self-administered 401(k)s and IRAs, and as more responsibility for medical coverage shifts to individuals, Americans today are often required to make a broader range of fiduciary decisions than the decisions their parents made, and more people are finding professional financial planning assistance a necessity.”   Interestingly-enough, in a recent survey commissioned by the CFP Board, 97 percent of the more than 1,100 participants identified trustworthiness a the most important factor they considered when looking for a professional financial advisor. That’s pretty much where that code of ethics and practice standards come in, and it also helps to explain the CFP Board’s dedication (and rightly so) in making ethical financial planning available to the public.   By the way, some recent updates to these ethical standards, which take effect in July of next year, significantly strengthens the ethical requirements for the more than 55,000 CFP professionals.   The CFP people even help the consumer by listing a series of questions that a consumer might want to consider when retaining a financial planner, such as:   What experience do you have?   What services do you offer?   What is your approach to financial planning?   Will you be the only person working with me?   How will I pay for your services?   How much do you typically charge?   Could someone besides me benefit from your recommendations?   Have you ever been publicly disciplined for any unlawful or unethical actions?   Can I have it in writing?   I love that last one!   According to Schaeffer, “Integrity, competence, and the desire to create trusting relationships with consumers are the cornerstones of CPR certification.”  The CFP people deserve a big ovation. They certainly are following through on that.