What types of activities does CFP Board consider "Material Elements of Financial Planning"?

CFP Board’s Disciplinary and Ethics Commission provides the following guidelines to help CFP® professionals determine when their activities are considered financial planning or material elements of financial planning. The primary factors on which CFP Board relies for determining whether "material elements" exist are: The client's understanding and intent in engaging the CFP® professional The degree to which multiple financial planning subject areas are involved The comprehensiveness of data gathering The breadth and depth of recommendations Activities that CFP Board would likely consider to be material elements of financial planning include: Conducting detailed data-gathering regarding multiple aspects of a client's financial situation Analyzing a client's data and making recommendations across multiple financial planning subject areas Providing investment advisory services as defined by the applicable State or Federal regulators Activities that CFP Board would not likely consider to be material elements of financial planning include: Opening an account or completing an application Fact-finding to meet regulatory requirements for suitability such as the "Know Your Customer" rules Solely providing brokerage and/or insurance products or services Engaging in activity solely related to the sale of a specific product Acting as a mortgage broker without providing any other financial services Completing tax returns without providing any other financial services Teaching a financial class or continuing education program The above are examples and should not be considered an all-inclusive list. These guidelines are designed to be helpful to CFP® professionals in reviewing their activities and determining whether they are providing material elements of financial planning. CFP Board’s Disciplinary and Ethics Commission also relies on these guidelines when reviewing allegations of misconduct by CFP® professionals. Question 1-9: How can CFP® professionals determine when a specific service or activity rises to the level of financial planning? Under CFP Board’s definition of “financial planning,” as found in the Standards, CFP® professionals are able to determine when they are providing services using the material elements of financial planning by considering, among other things, the degree to which multiple financial planning subject areas are involved. While it is more likely for financial planning to exist when multiple subject areas are involved, in some circumstances a financial planning engagement may exist even when a single subject area is involved. CFP® professionals should consider whether the client’s understanding and intent in engaging the CFP® professional would give the client reason to believe the services provided are financial planning. CFP® professionals should also consider the comprehensiveness of their data gathering with a client and the breadth and depth of their recommendations to a client. When determining whether a financial planning engagement exists, the entirety of a client relationship should be examined. These questions may guide that determination: Is the CFP® professional involving the steps of the financial planning process in the services provided? How many financial planning subject areas are involved to meet the client's goals? With respect to the services provided, what did the CFP® professional communicate to the client? Financial planning often does not occur in neat boxes but is a process that progresses and evolves over the course of a financial planner’s relationship with a client. For example, answering a question of a specific nature – such as “How much money do I need to set aside each month to send my two-year-old to Notre Dame in sixteen years?” – would probably not be considered financial planning. However, answering a broader question that involves multiple aspects of a client’s situation – such as “How much do I need to save so I’ll have a secure retirement?” – would likely rise to the level of financial planning because of the expansiveness of the financial considerations involved.