Does a CFP have a Fiduciary Responsibility?

Not all financial advisors are fiduciaries, but more and more people are seeking out advice from those who have that designation. What is the fiduciary responsibility and are CFPs bound to it?

Not all financial advisors are fiduciaries, but more and more people are seeking out advice from those who have that designation. What is the fiduciary responsibility and are CFPs bound to it?

What is a CFP?

A Certified financial planner, or CFP, is a designation that is awarded to financial advisors who have passed an examination that tests their competencies in every aspect of financial planning. After years of training—around 4000 to 6000 hours to be exact—they can receive the CFP distinction. The training doesn’t end there, however; they must continue their education after receiving their CFP certification.

What is a fiduciary financial advisor?

Fiduciary financial advisors “have a relationship of trust with their clients and abide by fiduciary duty, meaning they have an ethical obligation to act solely in your best interest.” A fiduciary helps eliminate the risk of trusting your money with the wrong advisor. They can provide you with valuable insights from an unbiased perspective.

Fiduciary advisors seek the best prices and terms for their clients, provide relevant facts and education, are trustworthy, and avoid conflicts of interest. If fiduciaries breach their duty by account churning or making unauthorized trades, then legally you are not entitled to the damages they caused.

Are CFPs always fiduciaries?

Yes, all CFPs are fiduciaries:

As of October 2019, the Certified Financial Planner Board of Standards, Inc. will require all certified financial planners (CFPs), including brokers, to be held to the fiduciary standard. Following a two year review, the Certified Financial Planner Board of Standards, Inc. revealed the revised CFP Board’s Code of Ethics and Standards of Conduct in March 2018. Under the previous code, the fiduciary standard only applied to CFPs when they were involved in financial planning with their clients.

How can I find a CFP?

Senior Finance Advisor makes it easy to find a certified financial planner in your area. We’ll match you with up to three advisors who can help you with your individual situation. Contact Senior Finance Advisor today to set up a free consultation.

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