CFP Board Allows Wirehouse Advisors to Call Themselves Fee-Only on Its Website

At the same time the CFP Board is contending with controversy over its decision to punish three of its former volunteers for compensation disclosure violations, it is allowing hundreds of similar transgressions to go unaddressed on its own website.

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Comments (7)
So what else is new at the CFP Board? It would be great to get everyone on the same page except they lost the page.
Posted by Jaime H | Thursday, September 19 2013 at 2:57PM ET
It seems they have stood things upside down. Jonathan Swift would not be surprised.
Posted by JOHN S | Thursday, September 19 2013 at 3:34PM ET
If there were to be a technically correct definition of advice based on statutory requirements, compensation disclosure is the least significant consideration in professional standing.

For example the continuous comprehensive counsel required for fiduciary standing is a professional imperative but not essential for planners who routinely declare fiduciary standing.

Compensation disclosure is just the beginning of aligning the interest of the advisor with that of the consumer.

From a corporate perspective, The Standards Board would not accommodate complex organizations engaged in planning even if they were actually acting in a fiduciary capacity in accord by statute. Could someone please explain this???

Posted by Stephen W | Thursday, September 19 2013 at 4:28PM ET
I appreciate that you are continuing to keep us informed on this issue.

Based on the "smell test" it doesn't seem like the CFFP Board is acting consistently. The issue that I keep coming back to for Goldfarb and others is "materiality." I'm not sure that the way the Board has taken its stance with the first three reflects appropriate materiality. The wirehouse CFP issue also seems to fail the consistency test.

Finally, my own suggestion is that we stop focusing on how the advisor (and/or his firm) gets paid and start focusing on the costs the client is paying. If any part of the client relationship with the advisor within the context of dealing with the firm thru that advisor involves commissions, then it's not a fee-only relationship. If all of an advisor's clients are never subject to paying commission for any aspect of their relationship with the advisor and with the advisor's firm, then it seems to me that advisor should be able to classify himself or herself as fee-only. So, in my mind, asking how the advisor is paid is less important than asking what costs the client experiences in the relationship.

Most firms have some kind of bonus structure and often it relates to production. I'm not sure that's significantly different from being incented by commissions. Extending that, anyone who gets a bonus for revenue growth would therefore be defined as getting a form of "commission" and thus could not properly call him/herself fee-only. I don't think we want to go there, but the half solution the board has currently adopted has far too many problems for it to be the final solution in this mess. They simply haven't addressed the issue as thoroughly nor as fairly as I believe they need to.
Posted by NORMAN | Friday, September 20 2013 at 4:10AM ET
As someone with no skin in the game, I think that it is dssgraceful that the CFPBOS acknowledge that they are allowing all these infractions and also use an excuse that they do not perform audit functions.

Clearly, the CFPBOS seems intent on devaluing its own license. I would expect to see 486 letters of admonishment.
Posted by Consumer A | Friday, September 20 2013 at 8:50AM ET
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