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Sounding Off: Did CFP Board Overreact With Goldfarb Sanctions?
Financial Planning
Wednesday, July 17, 2013
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Numerous readers responded to a recent article about the CFP Board sanctioning its former chairman, Alan Goldfarb for selecting “fee only” and, later, “salary” to describe his income on a form on the FPA website.

An ad hoc commission of the board concluded his salary may have been composed of commission. The story said that Goldfarb denies that he was being dishonest about the source of his income. In all other communications with clients, he says, he disclosed the fact that his former wealth management firm’s parent company paid him a salary and owned a broker-dealer.

“No one was trying to hide anything here, which is why I think this was blown out of proportion,” Goldfarb says. The sanction did not specify precisely how he should have described his income on the FPA website.

The sanction prompted Goldfarb to resign his position with the board. He also has left his former salaried job and is, essentially, starting over as an entrepreneur after more than 40 years as a planner.

Here is a lightly edited selection of reader comments about the story.

Posted by Susan E | Wednesday, June 26 2013 at 12:14PM ET:

Something is very wrong with how the CFP Board is publicly going after CFPs for unintentional errors that did not harm any member of the public. My son was in the process of preparing for his CFP and I have stopped him - what a sad statement. If I'm second guessing being part of an association that will ruin a good man's career over an unintentional error, why would I subject my son to such an abuse of power or misdirection of priorities? If we make an honest unintentional mistake, give us the opportunity to fix it - that's guidance. To publically ruin our careers over it - that's reckless. Shame on you CFP Board CEO Kevin Keller and Board attorney Michael Shaw for either directing this action or allowing it to happen.

Posted by Scot S | Friday, June 28 2013 at 5:47PM ET:

So the Board sanctions the man but "The sanction does not specify which box he should have checked." So now is everyone else in the same situation exposed WITHOUT ANY guidance whatsoever how to disclose their compensation arrangements?

Posted by J. H | Tuesday, July 02 2013 at 10:15AM ET:

After reading the article, as well as several others on the same subject, I took the weekend to do my own research. (1) I read every public "letter of admonition" on the CFP website. I figured the suspensions and revocations were for serious infractions but wanted to see what the Board did public letters for, as that's what they did against Mr. Goldfarb, which would be detrimental to any CFP's career. I was SHOCKED at the number of public letters for what appeared to have been an honest mistake or different interpretation of a rule. (2) I then "Googled" the names of several of the CFPs that received letters due to what appeared to be honest mistakes and discovered the Board’s disciplinary letter was one of the first results from the Google search. I've been a CFP for over 20 years and know prospects routinely Google my name as part of their due diligence before making a decision to work with me. Let me be clear that I would never intentionally violate a rule, nor would I ever do anything that was not in the best interest of the client. That doesn't appear to matter to the Board. The end result is that the Board routinely ruins the careers of CFPs with their public letters of admonition for infractions that do not warrant having one's career ruined over. … after reading all of the public letters of admonition, and how the Board words such letters to the public, the current Board is ruining the lives of good CFP's. Something has to be done to stop this. I have held the designation with pride for two decades but cannot in good faith, or good business, renew. What a shame.

Posted by Chris C | Friday, June 28 2013 at 3:57PM ET:

Clearly the CFP board wants to hurt the CFPs any way they can. This action taken by the CFP board is so completely ridiculous that there has to be something else going on. I wouldn't ever want to be part of an organization where a secret agenda is pursued at the cost of upstanding, reputable planners. Sounds like someone couldn't find damaging so they had to make this flimsy argument up. But an effort like this takes collusion, so the whole CFP designation is severely tainted.

Posted by Jackie B | Wednesday, June 26 2013 at 12:02PM ET:

(8) Comments
I wonder how many advisors will make the benefit/liability decision away from having the CFP designation. My guess is that the CFP board only will make changes if a substantial number of advisors drop their CFP designation, with a considerable decline in dues.

One suggestion is that the CFP handle "procedural" issues, like that noted in this article, in private. If no correction is made, then they can go public. Of course, issues which go beyond an innocent procedural mistake are a different matter.

Posted by Michael S | Thursday, July 18 2013 at 10:02AM ET
I have known Alan Goldfarb for over 20 years. As a recruiter in the industry who has talked to thousands of advisors over the years, I can truly say that if everyone conducted their business affairs like Alan, this would be a better industry. His pristine record with FINRA further attests to the quality of his work. We don't see any of his clients raising these issues, do we? He is truly one of the "good guys" out there. In this case there were no clients injured by his alleged improprieties and his intentions were clearly not in any way to avoid full disclosure. Considering the many positive contributions he has made to the CFP Board and to FPA over the years, the fact that these "leaders" wasted a lot of time on a witch hunt and didn't have anything better to do is deplorable. The CFP Board should focus on issues that are truly negative for clients and handle minor misunderstandings like this in a much more professional and discreet way. UGH!
Posted by Mitch V | Thursday, July 18 2013 at 11:10AM ET
I have mixed feelings about the sanction imposed against Mr.Goldfarb, and considering his involvement with the CFPBOS think that maybe a suspension may have been justified. Lately it appears that some well known personalities in the planning world seem to feel that their infractions should go unpunished.

He had an ownership interest and received a K-1, a form that is not used to report salary per se. That seems indisputable.

Furthermore- he had involvement with the CFP Board and possibly inflicted unnecessary pain on other certificants- who were not in a position to conduct the premeptive PR campaign that he did, and may not simply garner attention. He is reaping the fruit from seeds that he has sown.

If this had not been the Chair,but someone from Podunk, would anyone have cared?

Posted by Pat P | Thursday, July 18 2013 at 12:41PM ET
Before he chaired CFP Board, Alan Goldfarb was a member of the CFP Board of Professional Review for many years where he was responsible for hearing disciplinary cases, passing judgment, and assessing disciplinary penalties from CFP certificates who were found guilty. During the 2-3 year period when CFP Board redefined the definition of Fee only and changed the standard to require that CFP practitioners are held to a fiduciary standard, Alan presumably participated in the deliberations since he was an active member of CFP Board. There is no way a member of CFP Board or the Disciplinary Review Committee would not have known that the facts as presented by Alan himself in his own press release were sanction able. The standards are and definitions are very clear if you read them and considering the number of cases Alan heard and subsequently passed judgment against the CFP certificant on the very same subject matter, it is not believable that he didn't know he was transgressing.
Posted by Bedda D | Thursday, July 18 2013 at 2:40PM ET
Bedda, I respectfully could not disagree more. To my experience, the rules are extremely ambiguous, contradictory, and poorly communicated; my study of enforcement practices shows that they have been extremely arbitrary and poorly-informed. As others have indicated, I believe that there is far more to this story and that the facts, when they come to light, will not be pretty. If the Board continues on this course, the damage to the marks, and the profession, could be profound. But I ask you: clearly Mr. Goldfarb was fully cognizant with the rules, having helped create them. How could he have possibly been so foolish, given his prominence, to have brazenly broken them? What possible benefit could it have been? Why risk a distinguished career? This makes no sense. The only thing that does make sense is that the process is broken, and too much power is concentrated in the wrong hands.
Posted by Jeff C | Thursday, July 18 2013 at 7:09PM ET
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