More On Legal & Compliancefrom The Advisor's Professional Library
- Meeting and Exceeding Clients and Regulators’ Expectations Although it can be difficult, there are ways for RIAs to meet or exceed client expectations, increase customer satisfaction, and help firms retain current clients and attract new ones.
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
Sarah Ball Teslik, who joined the CFP Board of Standards as CEO in 2004 and sparked many changes at the Board, has resigned from the Board to take the newly created position of senior VP of policy and governance at Apache Corp., an oil exploration and development company. In announcing the resignation on October 12, Board of Governors Chair Barton Francis noted Teslik's "significant contributions," particularly the way she helped "streamline our operations and strengthen the fiscal management of the Board." In an interview shortly thereafter, Francis said it was his understanding that Apache had been wooing Teslik for years. He pooh-poohed any notion that the controversy over the proposed revisions to the Board's Code of Ethics and Practice Standards was responsible in any way for her departure: "She got a deal offer from a great company."
Francis said the Board of Governors was already negotiating with an unnamed interim CEO "who has experience with this kind of situation," and that Teslik's last Board meeting would be the regularly scheduled October 24 gathering.
It will be at that same Board meeting that the Governors will begin to address the responses to the proposed ethics revisions which prompted hundreds of responses from certificants and other interested parties. Among the comments was a strongly worded suggestion from the Financial Planning Association, dated September 25, that "these proposed revisions fail to enhance consumer protections or advance the profession of financial planning," and that "that the core tenets of the Code and Practice Standards have been essentially eliminated or made optional in this proposal." The letter, signed by FPA President Dan Moisand (available at www.investmentadvisor.com, in the table of contents for this issue), further charged that the proposals "constitute a complete reorganization of the Code with material changes that weaken, not strengthen, consumer protections," concluding that the proposals "be withdrawn, redeveloped with a more inclusive process, and resubmitted to the public and certificants for further comment."
In a letter to the Board dated October 5 and signed by 21 current and former leaders of the main planner organizations, the signatories charged that "the effective elimination of many practice standard requirements, the weakening of others and the proposed weak 'prudent person' fiduciary standard, coupled with an unacceptable 'opt out' provision, is not in the interest of consumers and devalues the economic significance of the CFP mark."
Francis said some have suggested that the existing Code "has something in terms of a fiduciary requirement that we are removing, or creating an opt-out, and that's not there...Under SEC rules, if you're performing financial planning you're a fiduciary who needs to register as an investment advisor. If you're not in a financial planning engagement, there's no enforceable fiduciary standard in the existing code."
FPA's Moisand said he doesn't fault the Board for wanting to make the rules less problematic to the nonpracticing CFP, but he argues that "what was presented does more than address that issue. It sets up not only a dual standard for CFPs, but it also sets up two standards for practicing CFPs. That's problematic for the development of the profession." He concludes by asking whether the CFP "is an occupational designation or the mark of a profession? The Board of Governors is the body that gets to make that choice. If it's a profession, you have to have high standards."--James J. Green