It was an unexpected—and shocking—announcement: After acknowledging what looked to be violations of the Certified Financial Planner Board's "Standards of Professional Conduct," Alan Goldfarb, chair of the CFP Board's board of directors, resigned in early November along with two members of the Board's Disciplinary and Ethics Commission (DEC).
While the news has shaken the CFP Board community, industry officials and some of Goldfarb's colleagues are vouching for his integrity. Still, questions remain in the CFP community as to why the alleged ethics violations—if not violations of criminal or civil laws—were referred to the DEC.
Upon hearing the news of Goldfarb's resignation, William Dorriety, a CFP at Optimum Asset Management in Daphne, Ala., told me his reaction was: "Wow!" Dorriety, who serves as a CFP ambassador to the Gulf Coast region, said the news "makes you feel a bit uneasy," and that he's hoping the CFP Board "releases information in a timely manner that takes the idea of a civil or criminal" violation off the table.
CFP Board stated in a release announcing the resignation that it became aware of "broad allegations that members of the Board and other volunteers may have violated provisions of CFP Board's 'Standards of Professional Conduct.'" After hearing of the allegations, CFP Board said that its board of directors created a "special committee" made up of public Board members who have no ties to the financial services industry and retained outside counsel to investigate and report its findings directly to the committee.
The special committee, the CFP Board said, "found sufficient merit in the allegations against Mr. Goldfarb and the two members of the DEC to refer them for further proceedings under CFP Board's 'Disciplinary Rules and Procedures.'"
While Kevin Keller, CEO of CFP Board, told me in an email message that the matter regarding Goldfarb and the two DEC members "does not involve alleged violations of criminal or civil laws," it's important to note that the CFP Board doesn't refer complaints of ethical misconduct to the nine-member DEC until it performs its own internal investigation of the said misconduct and, according to the Board, "determines there is probable cause to believe one or more of CFP Board's 'Rules of Conduct' may have been violated."
Keller said in his email message that the allegations "relate to possible violations of CFP Board's 'Standards of Professional Conduct.' The matter has been referred to the DEC for further proceedings under our 'Disciplinary Rules and Procedures.' To be sure, no final determination has been made; if a public sanction is warranted, it will be made public once the process is complete."
Keller added that "proceedings under CFP Board's 'Disciplinary Rules and Procedures' are confidential, and because of that confidentiality provision, CFP Board cannot disclose details related to allegations against CFP professionals."
But Katie McGee, director of marketing for Weaver Wealth Management, where Goldfarb is director of wealth advisory, told me that the CFP Board's investigation is "over what we believe was a misunderstanding of how [Goldfarb's] compensation was disclosed on the Financial Planning Association's website." Goldfarb's resignation, McGee said, was "voluntary," adding that the potential violation "doesn't involve a client complaint."
After being presented with the committee's findings, Goldfarb and the two DEC members resigned from their positions during a special Oct. 31 meeting.
On the same day, Goldfarb sent a letter to the board of directors, CFP professionals and the public, stating, in part, that: "I am certain that this was a misunderstanding, and I welcome the opportunity to engage in good faith the CFP Board's enforcement process consistent with its 'Disciplinary Rules and Procedures.'"
Goldfarb is director of wealth advisory services for Weaver Wealth Management in Fort Worth, Texas, and co-author of the CFP Board's standards and disciplinary rules. He added in his letter that: "As chair of CFP Board's board of directors, it is my responsibility to put the interests of the organization ahead of my own. I believe that under the circumstances, it is best for the organization that I resign pending the outcome of the process as both chair and a member of the board of directors, effective immediately."
