And Now, the Rest of the Alan Goldfarb Story

Perhaps not, but the Board, it seems, didn't see it that way. Apparently, the Camardas' "research" involved the way CFP Board members described their own compensation, including Alan Goldfarb and two members of the Discipline and Ethics Committee.

In a September 12 story on financialplanning.com, Ann Marsh quotes Sally Hurme, a member of the CFP Board's disciplinary and ethics panel: "The Camardas case and the Goldfarb case were intermingled. Their case brought up the issue of the Goldfarb case." All three of the Board members were forced to resign. The Board has yet to take any action against the Camardas, presumably due to the pending suit. Spokesman Dan Drummond will only say that the Board can't comment on ongoing litigation, but that the Camardas' suit is "without merit."

In their suit, the Camardas' defense seems to be that their wealth management firm and insurance agency are separate corporations, and therefore the wealth management firm can be described as "fee-only," even if the insurance firm charges commissions. Consequently, they take issue with the CFP Board decision that the two firms are "functionally one entity." Yet, as Ms. Marsh reports: "both Camardas have titles in each firm," and, presumably, they both own both firms—and refer clients back and forth.

Frankly, I gotta go with the CFP Board on this one. If those two firms aren't related parties, I don't know what would be. To my mind, this is the epitome of "related parties." In fact, all insurance agencies and affiliated BDs are separate companies. The Camardas' position is exactly the "two-hat" defense that some brokers and financial planners have confused clients with for years. To its great credit, the CFP Board is finally trying to do something about it.

At the same time, it's a tragedy that Alan Goldfarb and the other two Board members got caught in the crossfire of trying to do the right thing. For almost three decades, one of the CFP Board's weaknesses has been an institutional fear of legal challenges. At first, it was based on insecurity about its ownership of the CFP mark. Now, it's seems to be a fear of skeletons in its own closet that are causing ill-conceived reactions to situations such as Goldfarb.

Wouldn't it have been better to simply warn the Goldfarbs and the Camardas of the CFP world to stop calling themselves fee-only? Then, if they failed to do so, would such a draconian remedy as a public sanction seem warranted. But the bigger issue is the if the CFP Board really wants to be the regulator of all things financial planning (as it tried to become during the Dodd-Frank Act negotiations), it's going to have to get over its insecurity of appearances, and simply focus on doing the right thing: by CFPs as well as the public.