I don't mean to pile on the CFP Board, I really don't. As I've written in my blogs over the past couple of months or so, the Board has been doing some very good work of late: sending to the SEC (along with its FP Coalition partners, the FPA and NAPFA) an excellent defense of a true fiduciary standard for brokers, and enforcing its definition of "fee-only" (the strictest in the industry), in actions against three of its own officers, and Camarda Wealth Advisory (which responded by filling a lawsuit).
I know the Board is trying to the right thing—and making some tough calls to do it. But why do they have to do it in such an amateurish way? It only provides fuel to their critics, and makes things harder for their supporters.
In last week's blog, I wrote about the new revelation that the reason the Board sanctioned and forced three of its Board members to resign (including chairman Alan Goldfarb) was that part of the Camardas' response to its investigation was to accuse them of also inaccurately describing themselves as "fee-only." This also explained why Goldfarb received the Board's public sanction: so that it could be used in defense of the Camarda's charges of "unfair treatment."
But that's the old news. Now the fourth (or is it the fifth?) shoe to drop comes from Ann Marsh reporting on FinancialPlanning.com's ongoing investigation of the Board's "Find a CFP Practitioner" website. That Sep. 20 article revealed that there were some 486 CFP brokers from the four wirehouses who "call themselves fee-only on its website—in open violation of the board's own rules for use of the term." Now, in fairness, we should point out that the Board doesn't actively police CFPs, it only investigates complaints by third parties (or piles on, I mean, follows up on action by other regulators). But clearly obvious violations on its own website? Really?
But wait: there's more. In response to this, shall we say, troubling revelation, what does the Board do? Quietly send a letter to the offending brokers, including its prohibition against employees of commission-charging entities from calling themselves "fee-only," and asking them to reconsider their disclosures or face further action? Oh, no: that would make too much sense. Instead, the Board changed the "compensation" line of every CFP on its website who chose "fee-only" to "did not provide," as if they didn't want to reveal what their method of compensation is—and then sent a letter to all CFPs who claim to be fee-only on their site, along with the standards for doing so.
