Life Insurance Advice under New CFP®s Practice Standards

17 Pages Posted: 3 Dec 2019

See all articles by Barry Flagg

Barry Flagg

Veralytic

Ray Ferrara

affiliation not provided to SSRN

Paul Auslander

affiliation not provided to SSRN

Date Written: October 1, 2019

Abstract

CFP® Professionals are responsible for complying with the new Code of Ethics and Standards of Conduct as of October 1, 2019, with enforcement beginning June 30, 2020. These new Standards re define the meaning of “clients" best interests” for life insurance product recommendations to be consistent with other fiduciary rules, requiring CFP® professionals to “act with care, skill, prudence, and diligence” based on evaluation of “costs that the Client may incur” (among other things). Previously, due diligence for life insurance product recommendations was governed by the National Association of Insurance Commissions (NAIC) Life Insurance Illustrations Model Regulation #582, which doesn’t require disclosure of any costs, and as such is now considered “misleading”, “fundamentally inappropriate” and unreliable by financial, insurance and banking industry authorities. This commentary will, therefore, contrast decision support for life insurance product recommendations under CFP® Standards versus NAIC Regulations, and provide practical guidance for life insurance advice under new CFP®s Practice Standards.

Keywords: life insurance, CFP, practice standards, fiduciary, NAIC, illustrations model regulation, best interest rule, regulation 187

Suggested Citation

Flagg, Barry and Ferrara, Ray and Auslander, Paul, Life Insurance Advice under New CFP®s Practice Standards (October 1, 2019). Available at SSRN: https://ssrn.com/abstract=3488713 or http://dx.doi.org/10.2139/ssrn.3488713

Barry Flagg (Contact Author)

Veralytic ( email )

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Ray Ferrara

affiliation not provided to SSRN

Paul Auslander

affiliation not provided to SSRN

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