CFP Board Proposal to Extend Fiduciary Duty Could Improve Awareness of Life Settlements

Jun 29, 2017 6:09:00 PM / by Wesley Costa Director of Marketing and Education - LISA


This summer, the Certified Financial Planners (CFP) Board is proposing some bold changes to their fiduciary standards. Many of the approximately 77,000 CFPs in the United States could be impacted.

Investment News

An Investment News article recently reported that the proposed changes would require advisors to act in the best interests of their clients at all times while providing investment advice, not just while constructing financial plans as in the past.

The proposed policies are welcomed by Darwin Bayston, president and CEO of the Life Insurance Settlement Association. “Our hope is that the impact of this new policy will also encourage advisors to think of life settlements as part of the holistic financial planning process and inform clients of the alternatives when a life insurance policy is no longer needed, wanted or affordable,” said Bayston.

Many CFPs are not aware that life insurance is personal property, and fail to advise their clients that it can be sold -- just like any other property they own -- through a life settlement transaction. Each year, more than $140 billion worth of life insurance owned by Americans over the age of 65 is lapsed or surrendered back to the insurance companies that sold the policies – mostly from a lack of knowledge that an unneeded or unaffordable policy may be sold.




To better prepare advisors for how to meet the needs of clients who have questions about life settlements, the Life Insurance Settlement Association has a dedicated Consumer Advisors section that serves as a free information resource for financial planners, insurance agents, accountants, attorneys and other professionals who are in a position of providing counsel to seniors and their family members regarding important financial planning decisions. These resources can help advisors determine which clients may be good candidates for life settlements and which clients may be better served with other solutions.

While the LISA website provides a list of members who are subject to a set of ethical standards of practice and annually attest to abiding by life settlement laws and regulations, how does a consumer advisor select someone from the list of members that best fits the needs of their client? One recommendation would be to interview at least two candidates and check out this LISA blog with 7 questions for advisors to ask when selecting a life settlement firm.