What Does it Mean for an Investment Advisory Firm to be CEFEX Certified? January 1, 2022
You may wonder what goes into becoming “CEFEX-certified”? It’s more of a rigorous process than you might think. CEFEX-certified firms adhere to a standard representing the best fiduciary practices in their industry. The standards include specific criteria which have been substantiated by regulation or written in consultation with leading firms.
A successfully completed standards-based assessment results in certification. This is written assurance that the firm meets the requirements of the standard. The CEFEX Fiduciary assessment, in detail, includes administrative review, analyzes structure systems and reporting – where conflicts of interest may be addressed, analyzes risk and characteristics of the portfolio, and samples client deliverables. Because of this, advisors are better able to manage client portfolios and expectations through education, reporting, and disclosure. The assessment is conducted annually.
“CEFEX specifically serves the financial industry where fiduciary standards are important; a CEFEX Certified organization has met our rigorous quality control standards.” – Carlos Panksep, Managing Director, CEFEX.
Verified Annual Audits
CEFEX certified firms voluntarily undertake annual audits by independent expert analysts. This continually verifies their adherence to the applicable standards and is supplemental to oversight performed by regulators, or financial auditors.
Why It Matters
A CEFEX-certified firm places its clients’ interests first. Through structured processes, the firm will realize cost savings through improved quality, enhanced client satisfaction and increased market share. From a financial perspective, clients may realize investment objectives sooner and achieve a better alignment of investment services to expenses.
CEFEX certification increases trust. Trust is critical to firms which provide fiduciary functions and those that provide support services. Investors and Investment Stewards of retirement plans, endowments and foundations are continually looking for proof of integrity.
Annual audits maximize professionalism within the firm because management is required to keep up to date with best practices.
The CEFEX audit fosters a culture of continuous improvement within the firm and increases transparency and accountability of the management team.
Carlos Panksep, Managing Director of the Centre for Fiduciary Excellence (CEFEX), addresses how you as an individual investor benefit from having a CEFEX-certified advisor.
The Certification Audit
A CEFEX assessment is based on the international standard, ISO 19011: Guideline for quality management system auditing. The assessment is evidence-based, and all work is reviewed by the CEFEX Registration Committee to ensure impartiality and consistency.
The assessment typically includes document review, client file sampling, on-site visits, and interviews with senior representatives at the firm. The assessment is conducted by CEFEX Analysts who must hold the Accredited Investment Fiduciary Analyst® designation and a minimum of the ASPPA 401(k) Administrator (QKA) designation for ASPPA certifications. CEFEX Analysts maintain annual assessment training.
Where applicable, the assessment methodology includes questionnaires on regulatory matters, developed by expert attorneys.
The CEFEX certification standards are organized according to a four-step management process. The steps are analogous to the global ISO 9000 Quality Management System standard, which emphasizes continual improvement in a decision-making process.
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results.