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After Goldfarb Sanction, CFP Board Aims to Clarify Compensation Disclosure

After a surprising, high-profile sanction in June, the CFP Board appears to be trying to clarify its rules on compensation disclosure.

The CFP Board is hosting a webinar on Wednesday at 1:30 p.m. ET on "how to avoid misleading compensation disclosures" -- the very issue at the heart of the board's public sanction of former CFP Board Chairman Alan Goldfarb.

The Goldfarb sanction was tied to his compensation disclosure on the FPA website, where he selected first "fee-only” and later “salary,” despite his affiliation with a broker dealer.

The board's ad hoc Disciplinary and Ethics Commission concluded that because the “RIA and broker-dealer [in which Goldfarb had an ownership stake] received or were entitled to receive compensation such as commissions and 12b-1 fees ... Goldfarb misrepresented his compensation model.” Goldfarb resigned his position with the board as a result of the controversy.


The board says the webinar will tell participants "how to interpret CFP Board’s current compensation definitions, identify potential pitfalls and common mistakes by CFP professionals and [discuss] gray areas in how CFP professionals describe their compensation to consumers."

The panel is slated to be hosted by Rex Staples, director of investigations at the board, and will also feature Philip Fazio, a member of the board’s ad hoc disciplinary and ethics commission, Michael Shaw, managing director of professional standards and legal for the board, and Adam Zajac, adjudicatory counsel. The board declined to make available for an interview any of the four instructors.

“The title of [the webinar] pretty much caught me,” says a broker in the Midwest who would identify himself only as "Andrew P" and who said he plans to attend. “It feels like the board is on a mission to prosecute people and make examples of them. Why else would you put something out about how not to make us angry at them?”

He and multiple other planners who decline to be named say they fear reprisals from the board for speaking out about this and other issues.

One former volunteer with the board’s disciplinary committee -- who also weighed in online in defense of the board's sanction of Goldfarb -- views the webinar with skepticism. "I think the CFP board, because of the adverse publicity [regarding Goldfarb’s case], they are now doing something reactively," says Bedda D’Angelo, the founder of Fiduciary Solutions, an RIA based in Durham, N.C. “The people who need to know [more about compensation disclosures] will not attend.”

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