The FP Canada Financial Planning Standards Council published a notice, September 8, drawing attention to two new rule additions to its Standards of Professional Responsibility for Certified Financial Planner (CFP) and Qualified Associate Financial Planner (QAFP) professionals in Canada.
The new rules are standards for the use of technology in financial planning. Specifically, Rule 28 states that when relying on or using technology in the financial planning process, a CFP or QAFP designation holder must take reasonable, proactive steps to gain a general understanding of the methodologies underlying the technology being used in the financial planning process, including those used to create projections and recommendations.
Designation holders must also have an understanding of the financial assumptions underlying the technology, must validate that the inputs and assumptions used are reasonable and appropriate and must validate that the outputs generated are reasonable and appropriate for the client before relying on them.
Rule 29, meanwhile, says in all cases, the assumptions and rationale used must be documented and clearly communicated to clients.
FP Canada says the rules were developed by a technology working group. “The rules and associated guidance outline the steps professional financial planners must take to ensure that the output generated, and recommendations developed using financial planning tools, are suitable to the client’s goals, needs and priorities,” they write. “The rules also require that financial planners clearly document material assumptions and communicate them to their client.”
