Good to Know: Financial Planning, CFP® Certificants, and Implementation Responsibilities
Good to Know
Here’s a quick quiz question for CFP® Professionals who provide financial planning services or for those preparing for the CFP Board Exam:
A CFP® Professional who is providing financial planning services has no implementation responsibilities for financial products purchased as a result of recommendations if the Professional does not sell financial products.
- True
- False
Here’s what CFP Board Practice Standard C-6(a) has to say on the topic:
Addressing Implementation Responsibilities
Practice Standard C-6(a)
“A CFP® professional must establish with the Client whether [or not] the CFP® professional has implementation responsibilities. When the CFP® professional has implementation responsibilities, the CFP® professional must communicate to the Client the recommendation(s) being implemented and the responsibilities of the CFP® professional, the Client, and any third party with respect to implementation.”
A careful reading of the Practice Standard implies that the Certificant is not responsible for implementation unless so directed by the client. That implication is not wrong but may be overly broad. Based on additional review of other Practice Standards and CFP Board released Q and A discussions, we believe the more accurate interpretation is summarized by the following tip.
CFP® Exam Tip
A CFP® certificant is responsible for implementation unless specifically relieved of that responsibility by the client. If a question on your CFP Board Exam is silent on this issue, assume that the certificant is responsible for implementation. This is true even if the certificant is not selling or providing the product or service recommended.
The answer to the quiz question is “false.” Unless specifically excluded from implementation responsibility, the Certificant bears at least some responsibility in coordinating the implementation of the recommendation.
Disclaimer
The information presented herein is provided purely for educational purposes and to raise awareness of these issues; it is not meant to provide and should not be used to provide legal or financial advice to clients. There are variations, alternatives, and exceptions to this material that could not be covered within the scope of this blog.
