Course: Fundamentals of Financial Planning
Lesson 1: The Personal Financial Planning Process

Student Question:

Good evening.  In Practice Standard B-3 (shown below), is the “reasonable basis” why advisors have client agreements stating what services are provided?

Practice Standard B-3

The Practice Standards set forth in the Financial Planning Process – a CFP® professional must comply with the Practice Standards when:

  • The Client has a reasonable basis to believe the CFP® professional will provide or has provided Financial Planning.

Thank you,

John


Instructor Response:

Great question John,

You are correct.  The term “reasonable basis” places an additional burden upon the CFP® Certificant.  Even if no actual financial planning services are being provided or are agreed to be provided,  a CFP® Certificant must comply with this Practice Standard even if the client just “reasonably believes” financial planning services will be provided by the Certificant.  The term “reasonably believes” is hardly an objective standard so here’s my advice – If you see a CFP Board question that says “the client believes financial planning services will be provided,” assume the Certificant is subject to this Practice Standard.

Onward and Upward,

Bruce