If you’re a financial planner switching firms or ending a client relationship, new guidance from FP Canada clarifies your obligations.
On Thursday, the certification body provided guidance for planning professionals when they withdraw services, as well as when they refer a client to another professional. The guidance supports FP Canada’s standards of professional responsibility.
Planners have “specific professional obligations when withdrawing services from their clients,” the guidance says. “The nature and extent of these obligations will depend on why the planner-client relationship is ending.”
For example, the guidance provides the scenario of a relationship ending because you’re leaving your firm. In such a case, if your employment contract prevents you from telling the client, you must take steps to ensure the firm informs the client, the guidance says, and you must “reasonably believe” the client has been or will be informed of your departure.
An example of a step a planner could take in this case is requesting, in writing, that their manager or someone in management advise clients of their departure, FP Canada said in an emailed statement. The planner can also request confirmation that the communication was made.
“FP Canada has seen situations where clients were not made aware of the change, which has led to concerns on the client’s end,” the oversight body’s statement said. “As with all standards set by FP Canada, the goal is to ensure that clients’ interests are protected and clients are notified of important changes.”
Other scenarios provided in the guidance explain that if the relationship is ending because either you or the client decides to end it, you must take steps to ensure the withdrawal of services won’t negatively affect the client. For example, the planner should help the client with a time-sensitive matter, such as an RESP withdrawal, or otherwise ensure the client knows what to do and the consequences of failing to act.
The guidance also addresses confidentiality when a client relationship ends. For example, it references a disciplinary case in which a planner, upon leaving his previous firm, printed out client information and used it to contact former clients without their written consent (among other misconduct). That contravenes rule 31, duty of confidentiality, in FP Canada’s standards of professional responsibility.
“[T]he duty of confidentiality continues past the end of the client engagement,” the guidance says.
It also covers planners’ obligations when they refer clients to other professionals.
For example, you must take “reasonable steps” to ensure the professionals to whom you refer clients are qualified.
And if you refer to a professional who is also a friend, that potential conflict should be disclosed to the client in writing, per rule 8 in the standards.
The guidance was created in response to a survey in which planners said more details about these obligations would be valuable, and because FP Canada has received several public complaints related to the topics addressed, a release said.