Amid growing industry debate over compensation disclosure, the FPA has changed its compensation disclosure options.
The site has removed the option for an advisor to select salary when explaining compensation disclosure -- thus removing one of the choices that tripped up former CFP Board Chairman Alan Goldfarb.
The change reduces the FPA's compensation description options to three: fee-only, commission only and combination fee/commission.
Goldfarb was sanctioned by the CFP Board after selecting first fee-only and later salary to describe his compensation on his online FPA profile. Though he received fees from clients, Goldfarb was also drawing a salary from his then-employer, Weaver Wealth Management, whose parent company also owns a broker-dealer in which Goldfarb owned a 1% stake.
'MEMBERS AT RISK'
The FPA change is a response to a clarification from the CFP Board last month, which noted that CFP certificants may not call themselves fee-only if their employers or any other related parties receive commission income.
We dont want to put our members at risk if we offer different options than the CFP Board, says FPA President Michael Branham.
In making its change, the FPA sent out an email to all of its members who had checked salary and let them know they would need to select another option, Branham says.
The FPA still has a blank option on the website pull-down menu of choices. Planners who select that option are by default choosing a does not disclose option, according to Branham, who became the FPAs president this year. But that choice may not remain, Branham says: We need to look into when and why that that blank option is there, with the likely option that it should be removed. I dont know how or why it came to be and thats what we are looking at right now.
Representatives of the FPA plans to meet next week with those from the CFP Board and NAPFA -- its two fellow members of the Financial Planning Coalition, which advocates for the further professionalization of the planning field.
The recent CFP clarification highlighted the fact that the CFP Board and NAPFA, which only admits fee-only planners as members, define the hot-button fee-only differently. As a result, as many as 150 or so of NAPFAs members may not be able to call themselves fee-only without running a risk of drawing a sanction from the CFP Board.
It is confusing for consumers to have disagreement among the coalition members about the definition of basic terms, Branham says.
People are paying more attention to what these definitions are, he adds, and I think that highlights the need for all three organizations to have a broader conversation about those definitions going forward.
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