I find it intriguing that physicians are one of the only professionals who pledge an oath before practicing their craft. Other notable “oath” moments in our country focus mainly on Nationalism and Service (Military, Law Enforcement, Public Servants and Naturalization among others). How different might some professionals behave, if included in their daily duties, was the acknowledgement that they are working under an assumed set of values and principles that help guide their tasks? For CERTIFIED FINANCIAL PLANNER™ professionals this exists, not in an oath form however; but within principles expressing ethical and professional ideals.
In March of this year, the CFP® Board released their new Code of Ethics and Standards of conduct. To quote the board, this updated standard is designed to not only add rigor to the designation, but also “enhance the integrity and value that CFP® professionals bring to the clients and communities they serve.” Most notably, and central to the new Code, is the expansion of the fiduciary standard. If you aren’t familiar with this standard, but you have taken the Hippocratic oath, then it will sound familiar. Simply put, it requires CFP® professionals to act in the best interests of the client at all times when providing financial advice.
While still not a traditional ‘oath’, the fiduciary standard and the updated Code is highly significant for the financial planning profession. There are of course those who have lived by the ethos of the fiduciary standard long before it was introduced, but for many this is a necessary shift in mindset. The new code of ethics and standards is interestingly similar to that of the Hippocratic oath, so let’s break down a few of the new CFP® Codes of Ethics to see the threads that bind these two professions.
Act in the client’s best interests: Before the fiduciary standard was rule, the suitability standard was the commonplace nomenclature for many financial “advisors.” Is this product or investment ‘suitable’ for the client based on their needs and wants, despite whether it was the most cost effective or even if a better alternative was available? Suitability means selling a sweater that fits you; fiduciary means it has to look good on you too! This shift in focus is at the heart of the updated standards. Oath equivalent: “I will apply, for the benefit of the sick, all measure that are required, avoiding those twin traps of overtreatment and therapeutic nihilism.”
Act with honesty, integrity, competence and diligence: Let’s focus here on competence and diligence and agree that honesty and integrity are inherent principles no matter the profession. Competence and diligence not only mean know your craft and provide it thoroughly, but also know when you enter a grey area and are simply unsure how to best help. Collaboration with other knowledgeable professionals is important for the planner and the client because each professional is making sure their area of expertise is included to complete the bigger picture in a client’s situation. This may include accountants, estate lawyers, or other financial colleagues. “I will not be ashamed to say “I know not,” nor will I fail to call my colleagues when the skills of another are needed for a patients recover.”
Maintain the confidentiality and protect the privacy of client information: Trust is central to both professions and this is certainly a standard that has not changed from prior versions. We must ensure that only those authorized to information have access. We both have regulatory bodies (HIPPA, FINRA. SEC)* that ensures this standard is followed for all, but the Hippocratic oath says it best. “I will respect the privacy of my patients, for their problems are not disclosed to me that the world may know.”
Act in a manner that reflects positively on the financial planning profession and CFP® certification: Upholding the aforementioned standards leads naturally to the final one. Above all else, be an example in your line of work that may inspire others and solidify the high standard by which we strive to bring to our clients. “May I always act to preserve the finest traditions of my calling…”
Both the medical and financial planning professions focus on the individual and their unique needs, so it is fitting that their creeds read similar. If you are looking for a CFP® professional, pay attention to whether they mention acting as a fiduciary, whether on their website or in person. While we can’t expect verbal oaths in all professions to protect and uphold values pertinent to that role, we should expect more from someone giving us advice.
Bridgeworth, LLC is a registered investment advisor.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine what is appropriate for you, consult a qualified professional.
*HIPPA – Health Insurance Privacy and Portability Act
FINRA – Financial Industry Regulatory Authority
SEC- Securities and Exchange Commission
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