The CFP Board, which designates a certified financial planner, is seeking comments on proposed sanction guidelines.
A certified financial planner who declares bankruptcy for a second time could lose his professional designation, according to guidelines proposed this week by the CFP Board as part of an ongoing effort to maintain the integrity of the CFP mark. The same penalty would apply to a certified financial planner found by a regulatory agency to be operating a Ponzi scheme.
The CFP Board – also known as the Certified Financial Planner Board of Standards – awards the CFP designation to financial professionals who have taken a specialized course, passed a comprehensive exam and meet additional requirements for education and work experience. In addition, a certified financial planner must pledge to adhere to a strict code of professional ethics and meet continuing education requirements. About 65,000 professionals working in the United States currently carry the CFP mark.
To help uphold a standard of excellence, the CFP Board has laid out guidelines for sanctions for a certified financial planner who violates the board’s code of ethics. The board is seeking comments on the proposed sanctions through May and plans to finalize the guidelines by July 2012.
A breach of fiduciary duty – the obligation to place a client’s financial interests foremost – could result in a three-month suspension for a certified financial planner. The three-month suspension would also apply to a certified financial planner engaging in forgery.
Borrowing money from a client would trigger a public letter of admonition for a certified financial planner, who would face the same penalty for commingling accounts or failing to disclose a conflict of interest. A certified financial planner who failed to meet continuing education requirements would be censured privately by the CFP board. Individuals wish to comment on these and other proposed sanctions can go to firstname.lastname@example.org .
According to a self-governing industry group called FINRA - the Financial Industry Regulatory Authority - a certified financial planner is one of several types of financial professionals that can help investors create and implement strategies for saving for college, buying a home, retiring and achieving other life goals.
A professional who carries a certified financial planner designation must be versed in all aspects of financial planning, including tax strategies, estate planning, insurance issues and investing, according to the CFP Board. A certified financial planner can wear many hats, though most are registered investment advisors, broker dealers, certified public accountants and insurance agents, according to a spokesman for the CFP Board.