Revelations that leaders of the New York chapter of the Financial Planning Association may have improperly solicited clients at public awareness events are roiling other chapters around the country.
The meltdown in New York involved an internal ethics debate about displaying business cards, among other promotional practices. It eventually snowballed out of control, triggered legal complaints and led the national association to take "the nuclear option" of cutting ties with the local organization.
Current and former leaders of three of the country's largest chapters — in California, Massachusetts and Pennsylvania — expressed concern about reputational fallout for FPA members everywhere who have been working to evolve public perception away from the pervasive image of the sales-driven advisor who cannot be trusted.
"The general public looks at this and says, 'The FPA, they screwed some people over in New York,'" says Jeffrey Tomaneng, president-elect of FPA Massachusetts, the largest FPA chapter in the country. "It kind of pissed me off because … even if in New York there were a lot of leaders who did this, I have to believe there were dozens or hundreds of others who were on the up-and-up. Now it's like guilt by association."
In the wake of allegations, the national office of the FPA took the unprecedented step of dissolving its affiliation with the New York chapter last month, and starting a new chapter under new leadership and entirely under the control of the national office. The move may mark the first time that FPA’s national office has closed and taken over one of its 86 local chapters, says David Brand, director of strategic operations at FPA National.
The situation was bad enough in New York to warrant the move, he says.
“The level of vitriol — the vileness in the back-and-forth conversations were so extreme,” Brand says. “That is why we took the nuclear option.”
It did so after Devika Kamboh, who began the year as the president of the FPA of New York, accused fellow officers of systemically succumbing to conflicts of interest and protecting each other from her efforts to persuade several of them, including the now-former chairman Anthea Perkinson who served as president last year, to step down.
Perkinson did not respond to calls. Kamboh declined to comment.
Kamboh filed her complaint to the attorney general's charities bureau against 12 volunteer leaders or officers of the chapter. The bureau did not respond to a request for a comment.
She filed another complaint with the Equal Employment Opportunity Commission and a federal lawsuit is expected to follow, says her lawyer, Martin Asatrian.
The attorney general complaint, obtained by Financial Planning, also alleges that Kamboh, who was born in India, was subjected to discrimination based on her gender and race. The board denies her accusations of discrimination, calling them "inflammatory and unsubstantiated."
The complaint includes emails and documents showing members of the New York board allegedly seeking to solicit prospects, using methods that appear to break the chapter's conflicts of interest policy. As a condition of serving, all board members sign the policy, the first sentence of which states that they "must act at all times in the best interests of FPANY and not for personal or third-party gain or enrichment." The methods of solicitation included:
- Asking attendees at FPA events for their contact information on forms distributed after presentations.
- Bringing business cards to events intended and advertised as purely educational, a practice explicitly banned by FPA national.
- Divvying up prospects' names and contact information from events and distributing them among seven current and former FPA New York leaders, including Perkinson.
"The board members, by assigning clients to themselves, violated our mission of being an educational institution whose policy is not to use the organization to directly solicit clients," Kamboh, wrote in the attorney general complaint.
The complaint also includes a copy of an Oct. 9 email from then-FPA New York board member Stephanie Genkin to speakers at a forthcoming Financial Fitness Workshop advising them that the purpose of the event is "to educate, not to sell." (Disclosure: the author of this article previously engaged Genkin as an advisor.)
"As such," Genkin added, "there ought to be no solicitations at the presentation. Business cards may be laid out in front and handed to attendees only upon request."
"Naw, you can't do that. You can't do that," Vincent Barbera, FPA Philadelphia's 2017 chairman, says about the business cards. "That's a rule."
Eric Toya, a past FPA Los Angeles president echoed the reactions of Barbera and Tomaneng.
"You are not to solicit business. You are not to give our your business card," he says, adding that this rule "is made absolutely clear."
Genkin did not respond to attempts to reach her.
Kamboh's complaint also reproduces a copy of an attendee evaluation form, for a talk to be given by FPA New York board member Thomas Chu, with a section where prospects could provide their contact information (Financial Planning featured Chu in an article about
pro bono award winners last year). Chu declined to comment.
Barbera, Tomaneng and Toya all described the same policy they said prevails nationwide, which forbids the distribution of such forms.
During the last pro bono event he attended in his state, Barbera said the names of FPA volunteers and their firms were on the back of a brochure. The most an advisor could do, if asked for contact information by a client, was to circle his or her name.
"Then they could do a Google search later," he says. "But that was on them." Tomaneng and Toya concurred.
While the difference between sharing an advisor's name and presenting a business card may sound immaterial, it is not, all three said, as did Brand.
"FPA always errs on the side of avoiding even the appearance of a conflict of interest and therefore we adhere to the instruction that presenters at FPA public events do not solicit the public through the dissemination of business cards or other means of solicitation," Brand wrote in an email.
"Take that sip of whiskey and the next thing you know you are downing bottles," Barbera says, adding that, absent rules like this one, pro bono events could devolve into sales free-for-alls with FPA members whispering "call me" into attendees' ears.
"As leaders of our chapters, we need to be held to that standard," he says. "Even if we say the individual could benefit from that advice, this isn't the place for that to happen.
"A lot of it has to do with the feeling you get in your belly," Barbera says, adding of the New York problems, "This is making me so sick, my acid reflux is bubbling."
Were he ever to discover such a problem at his chapter, Tomaneng says he would "move toward discipline, which might be basically giving [any offending officers] the boot."
"In this situation," he adds, "it sounds like, from what I do know, is Devika tried. Her thing is she tried to follow procedure and what is being said is FPA New York and national tried to kind of sweep it under the rug."
To the contrary, Brand says the national office acted swiftly, making the decision to dissolve the affiliation when it became apparent that the New York board members could not resolve the controversy through mediation.
"It's not like FPA is twiddling its thumbs for months," Brand says. "We went from the suggestion of mediation to the nuclear option within one week. … We are patting ourselves on the back saying, 'Isn't it great that we stepped in immediately.' We felt great about it.'"
He added that the national office decided not to review the evidence Kamboh gathered, in favor of offering training for board members on conflicts of interest.
"I guess we could spends tens of thousands of dollars on an investigator," Brand says, "but how about do the training, bring our lawyer in and let's make sure the behavior in the future complies with FPA's values, rather than getting into the nonsense of who was right or wrong in the past?"
However, acrimony on the board foreclosed that route, he added.
In her complaint, Kamboh says she brought her concerns about what she describes as "self dealing" to Brand at the end of last year before she became president on January 1.
"David Brand then suggested I overlook these potential conflict of interest violations and suggested that we allow all involved board members, including the past president, to continue serving as the 2018 board of directors of FPANY and use this as a learning experience to set more robust FPANY guidelines," she wrote. "I was immediately labeled a troublemaker, a lone wolf and a whistleblower, and I faced a hostile board when I took over the role of president."
In response, Brand says, "No one ever used the labels described in her statement."
He adds that after Kamboh raised these issues with him, he suggested that the New York board members meet with the national office's attorney "to review the New York board’s conflict of interest policy to ensure that it would be applied appropriately and in the public’s best interest going forward. Since the New York Chapter [was] a separately incorporated legal entity, this was just a suggestion."
Brand says the national office has not arrived at a conclusion as to who was right between Kamboh and the board members who opposed her. However, FPA spokesman Ben Lewis provided the following statement:
Ms. Kamboh has made a series of inflammatory and unsubstantiated allegations, among them, that FPA ignored her allegations of unethical behavior by certain chapter board members. This is not accurate. Since several New York chapter board members had completely different interpretations of the circumstances that concerned Ms. Kamboh, FPA worked with the New York chapter to support the board's understanding of the New York chapter's policies, procedures, and bylaws to ensure that they would be followed in the future. Ms. Kamboh supported this approach and called a meeting of the New York chapter board, at which time FPA provided the requested assistance to help the New York board of directors resolve their policy disputes and internal differences. At no time during this process did Ms. Kamboh complain that FPA was burying or avoiding the issue. Any allegations that Ms. Kamboh is making about discriminatory practices that FPA has engaged in are false.
In her complaint, Kamboh said that, as she continued to try to enforce the rules of the chapter, her efforts "led to ongoing retaliation against me as an officer and also as a woman of color by this board." She added that other board members, including the executive committee, last month "unsuccessfully tried to vote me off the board of FPANY, by threatening and bullying other board members to vote against me as ongoing retaliation to my efforts at transparency and conducting my fiduciary responsibilities."
Tomaneng adds that he feels badly for all involved and speculated that part of the conflict could be driven by a personality clash, particularly if some have taken issue with Kamboh's management style.
"I think being direct can come across as being abrasive, and I know she's a very direct person," he says.
Judy Volkmann, who founded the first FPA chapter in the country when she launched FPA New York in 2000, calls the national FPA's decision to effectively close the existing chapter and open a new one "on point."
"It’s very difficult to mince words," Volkmann adds. "I think the lawsuit by Devika Kamboh is ridiculous."
Regarding her allegations, she said, "I would have a hard problem believing [them] because I know the people at FPA NY, and they are very dedicated. They don't do that. I've been in pro bono. They don't do that." (Financial Planning selected Volkmann as the top winner of its 2017 pro bono award.)
For his part, Tomaneng says that although he doesn't know if the problems with alleged misconduct in New York were as bad as portrayed, now "I can't say it would never happen here, because I thought it would never happen in New York."
Sean Allocca contributed reporting.