And Rules of Professional Responsibility For Certified Wealth Preservation Planners and Certified Asset Protection Planners

 

Preface

 

As Certified Wealth Preservation Planners and Certified Asset Protection Planners, we recognize the importance of making known to the profession and to the general public the principles that guide our efforts to provide services to our clients.

 

Ethical dilemmas occur when values are in conflict.  Certified Wealth Preservation Planners Code of Ethical Conduct states the values to which we are committed and embodies responsibilities of the profession in this changing tax and financial environment.

 

CWPPs and CAPPs significantly influence the legal and financial decisions of their clients.  We are members of a profession explicitly committed to knowledge, intellectual decisions, and have a special obligation to accuracy, presenting information, and financial planning strategies to our clients.  Above all, our commitment is to our client and their best interest.

 

Code of Ethics

 

The principles of this Code of Ethical Conduct are expressed in broad statements to guide ethical decision making.  These statements provide a framework to guide CWPPs and CAPPs:

 

1. CWPPs and CAPPs  provide the highest level of service to their clients; accurate, unbiased and designed to meet the financial desires of their clients.
2. CWPPs and CAPPs protect each client’s right to privacy and confidentiality with respect to information, both personal and financial.
3. CWPPs and CAPPs treat colleagues and other professionals with respect, fairness, and good faith.
4. CWPPs and CAPPs do not advance private interests at the expense of their clients, their colleagues, or other professionals with whom they associate.
5. CWPPs and CAPPs distinguish between personal convictions and professional knowledge, not allowing personal beliefs to interfere with fair representation of the facts.
6. CWPPs and CAPPs strive for excellence in the profession by maintaining and increasing our own knowledge and skills, by encouraging the professional development of colleagues, and by setting the best interest of our clients as our number one priority.

 

Rules of Professional Responsibility

 

As a general statement, most advisors who are asked to sign a boiler plate looking “Code of Ethics” do so without reading it carefully (because they are under the assumption that would not violate whatever is in the document).

 

While The Wealth Preservation Institute is not taking this issue lightly, the ethics board does believe that the Code of Ethics and more specifically the Rules of Professional Responsibility can be written in a non-boiler plate manner and yet cover the topic in a complete and more understandable/useful manner.  The following are Rules of Professional Responsibility that CWPP™ and CAPP™ certified advisors will be expected to follow.

 

Rule Number 1 – The Client’s Interests Always Comes First

 

Whether advisors are helping a client file a tax return, purchase a term life insurance policy, or invest $10,000,000 into a “freeze” partnership for estate planning purposes, there is almost always the opportunity for an advisor to take advantage of a client who does not know as much about the topic as the advisor.

 

Rule Number 1 is more important for CWPP™ and CAPP™ advisors than any other certified advisor (including CFP, CLU, ECS, etc.) because many of the topics a CWPP™ or CAPP™ advisor learns are unique topics not known by the client or his/her other advisors.  As such, the topics are easier to abuse due to the ignorance of the client and other advisors and the added credibility a CWPP™ or CAPP™ advisor has with their certification.

 

The golden rule of the CWPP™ and CAPP™ programs are that the client’s interests always come before the interests of certified advisors. While the golden rule sounds simple, it is constantly violated by advisors. A few examples will help advisors understand how not to violate this golden rule.

 

Example 1:   Assume a client needs 30-year term life insurance and the advisor is a licensed insurance advisor.  The client looks to the advisor as the expert and expects unbiased advice.

 

Assume the agent looked at various insurance companies and found two companies of similar financial strength that would be good for the client.  One company has a lower insurance cost, but the company with the higher costs just happens to be the company where the advisor places most of his/her business.  Lastly, assume the advisor would receive a $5,000 production bonus if the advisor recommends the higher charging company and places the client’s premium with that company.

 

The question is:  Which company should the advisor recommend?

 

A CWPP™ or CAPP™ certified advisor won’t hesitate to say the company with the lower premium because the companies are of equal financial strength and the products are the same.  A greedy insurance agent with lower ethical standards would recommend the higher charging company because of the $5,000 production bonus and the fact that the client will never know the difference.

 

The above example is a violation of Rule Number 1 and would subject a CWPP™ or CAPP™ advisor to a reprimand or revocation of the their certification.

 

Example 2:  Assume a physician client who is 55 years old lives in the State of Texas, has a $1,000,000 brokerage account, and comes to a CWPP™ or CAPP™ advisor for advice on “asset protection.”  Assume the advisor is a licensed insurance advisor who knows that in Texas life insurance is asset protected from creditors.  The client tells the advisor that he really likes to have his money in the stock market, and he has done well investing it on his own.

 

Assume that, after a review of the client’s holdings, the client should have his money in an FLP or offshore asset protection trust for asset protection purposes.  Unfortunately for our CWPP™ or CAPP™ advisor, he does not make any money from telling the client to move money into an FLP or offshore trust.

 

Question: Should the CWPP™ or CAPP™ advisor recommend that the client use an FLP or offshore trust or take the easy route and simply tell the client to “invest” the money in life insurance because in Texas the asset will be protected from creditors?  Assume the client would take whatever advice the advisor gives.

 

The Answer is the CWPP™ or CAPP™ advisor should lay out all the options and then, based on the client’s feedback, recommend that the client use an FLP or offshore asset protection trust because both would still allow the client to actively manage his money and both would provide the needed asset protection.

 

A non-CWPP™ or CAPP™ advisor who is greedy and self-interested will almost always go for the insurance sale because “that’s how insurance agents make money.”  When life insurance and/or annuities are not the proper tool of choice, it should not be sold to a client simply because the client wouldn’t know any better.

 

Example 3:  Take the same facts as above except assume the advice being given is by an attorney who makes money from hourly legal work.  Further assume that the advisor is an offshore asset protection specialist.  As you will learn in the course, offshore asset protection is the best way to protect assets; however, many clients do not want offshore either because of cost or because of the trust needed in the trustees of offshore trusts.

 

After interviewing the client, it becomes clear that the client is not comfortable with offshore planning.  Assume that if the attorney pushes things he believes that the client will agree to use the offshore trust.  Assume an offshore asset protection plan will cost $20,000 in legal fees, and a domestic plan will cost $5,000 in legal fees.  Lastly, assume the attorney believes that a domestic asset protection plan, while not as good as an offshore plan, would work fine for this client because he works for a hospital with a $10,000,000 umbrella malpractice policy.

 

Question: Should the attorney push for the offshore plan?

 

A CWPP™ or CAPP™ advisor should give objective advice on both the pros and cons of offshore and domestic asset protection and should inform the client that a domestic plan should work fine even though an offshore plan provides better protection.  The attorney can still recommend offshore planning because it does provide better protection, but the advisor should not slight domestic asset protection or “push” the client into an offshore plan because the legal fees are four times higher.

 

Summary on Rule Number 1

 

While there may be a few grey areas when it comes to the golden rule, advisors who guide themselves by common sense and the goal of always putting the client’s interests in front of advisor’s interests should not run afoul of this rule.  If an advisor is honest with the client, always lays out the viable options with full disclosure, and gives an objective recommendation, Rule Number 1 should never be violated.

 

Rule Number 1 encompasses the “Integrity,” “Objectivity,”  and “Fairness” a CWPP™ or CAPP™ must have in order to be worth of the CWPP™ or CAPP™ credential.

 

Rule Number 2 – Confidentiality

 

Attorneys, CPAs, accountants and EAs are all familiar with confidentiality rules from receiving their licenses.  Virtually all other advisors, insurance advisors, financial planners, and securities licensed advisors are familiar with the concept even if they are not bound by a confidentiality code from a current license.

 

A CWPP™ or CAPP™advisor will gain the trust of a client on many topics that are of great importance and require the client to provide full disclosure of personal assets, liability, and potentially negligent acts of the client.  By dealing with topics like asset protection, CWPP™ or CAPP™ advisors will learn the most intimate details of a client’s life.

 

A CWPP™ or CAPP™ advisor must keep all personal and financial information confidential unless a client authorizes otherwise.  A violation of Rule Number 2 will be simple to determine.  If a CWPP™ or CAPP™ advisor learns any information not know to the general public and shares that information with someone outside of the confidential relationship, the advisor will be in violation of this Rule.

 

As is the case in many office settings, information of a client must be shared with secretaries and other colleagues in the office.  CWPP™ or CAPP™ advisors should have a standing rule in their offices that the staff and other colleagues will not share any client’s information with others.

 

A violation of this rule will subject a CWPP™ or CAPP™ advisor to a reprimand or revocation of their designation.

 

Rule 3 – Professionalism

 

A CWPP™ or CAPP™ holds a designation that are the only “advanced” designations in the country and, as such, they are held to a higher standard of professionalism than other certification courses.

 

It is easy to say that CWPP™ or CAPP™ advisors have responsibilities to behave with dignity and courtesy to all those who use those services, fellow professionals, and those in related professions.  It is easy to say that a CWPP™ or CAPP™ also have an obligation to cooperate with fellow advisors to enhance and maintain the profession’s public image and to work jointly with other  advisors to improve the quality of services.  While it is easy to say the previous, it is tough to define proper conduct.

 

Like most of this Code, if an advisor simply acts as common sense dictates, rules will not be violated.

 

One example does need to be given as a violation of Rule 3 that has come up for discussion many times by CWPP™ advisors.

 

The example is as follows:  CWPP™ or CAPP™ advisors have unique credibility and knowledge on topics.  As such they are able to give seminars for many different types of audiences (such as physicians, CPAs, attorneys, accountants, insurance agents and financial planners).

 

One type of conduct that must be avoided when giving a public seminar is the use of foul language.  If a CWPP™ or CAPP™ advisor gives a seminar where there is an intentional use of foul language, that is a violation of Rule 3; and the advisor will be subject to a reprimand or revocation of their designation.

 

Rule 4 – Competence

 

While having Competence as a rule might seem a bit strange since a CWPP™ or CAPP™ advisor is a “certified” advisor by taking either 240 or 160 question multiple choice and three question essay test, it is important to remind certified advisors that they need to remain competent.

 

The CWPP™ and CAPP™ are unique in that they are the only certification courses that not only requires annual continuing education but also requires advisors to take a three question essay competency test every three years to keep the certification. Therefore, The WPI helps advisors remain competent.

 

Competency for this Code shall be limited to topics covered in the CWPP™ or CAPP™ courses (which includes asset protection, estate planning, income tax planning, and certain types of financial planning).  The CWPP™ and CAPP™ courses are not money management courses, and CWPP™ or CAPP™ advisors are not tested or certified as money managers (although CWPP™ and CAPP™ advisors are charged with the duty of advising clients on how to protect their investments from downturns in the market).

 

If a complaint is made to The WPI about the competence of a CWPP™ or CAPP™advisor, those allegations will be looked at for possible revocation of their designation.  However, the ongoing testing is designed to weed out advisors who receive the designation but choose not continue to remain competent in the topics covered.

 

Diligence – CWPP™ and CAPP™ advisors are educated on topics that lend themselves to high income/net worth clients.  Those types of clients expect and deserve (as all clients) a certain level of professionalism and diligence by their advisors.

 

Diligence simply means that an advisor should act in a timely manner to provide advice to clients.  Like all parts to this Code, if an advisor uses common sense, this rule should not be violated.  CWPP™ and CAPP™ advisors shall make every effort to provide advice in a timely manner and should not put off until tomorrow what can be done today and delivered to a client.

 

Because of the nature of the topics learned in the CWPP™ or CAPP™ course, sometimes multiple days and even weeks of research or work is required to put together a complex plan for a client.  In order to comply with this section of the Code, advisors should make sure they set out up front with the client how long it will take to research and make a recommendation and how long it will ultimately take to implement a plan once approved.

 

Many complaints from clients can be avoided by simply keeping a client updated on the status of putting together a plan.  Keep clients updated and informed, and do your best to get work done in a timely manner; and you will not have problems violating this rule.