The CFP Board ‘inexcusably’ protects certificants at expense of the public

Register now

To CFP Board Chairman-elect Jack Brod and members of the board of directors:

As you are aware, the CFP Board has used funds to create an advertisement that states: “If they’re not a CFP pro, you just don’t know. Find a certified financial planner professional who’s thoroughly vetted (italics mine) at LetsMakeAPlan.org. CFP. Work with the highest standard.”

As you are also aware, The Wall Street Journal recently exposed this blatantly false advertising in a front-page story entitled “Financial advisor directory often omits red flags”. The article stated: “Thousands of the planners bearing the board’s seal of approval have had customer complaints or faced criminal or regulatory problems — often directly related to their work with clients.”

This could not have been news to the CFP Board and management. I wrote two articles that got to the root of the discrepancy and showed that CFP disciplinary actions almost always came after those of regulators and courts. It is therefore not in the least bit surprising that there would be thousands of CFP certificants with “clean” records in LetsMakeAPlan.org but ones, in fact, where regulators have taken action. I believe it would have taken minimal staff and time to tally 10 years of data to determine what percentage of disciplinary action by the CFP Board came after that of other regulators and courts. Why did the board of directors not request this data from management?

But rather than learn from the mistakes Financial Planning exposed in 2013 regarding false listings of advisors’ “fee-only” status, the CFP Board doubled down on looking the other way. As a rule, management can be proactive or reactive. The CFP Board has chosen to allow management to be inactive, constituting a failure of its fiduciary duty.

That the CFP Board doesn’t even bother to sufficiently review public records while advertising to the public that certificants have been thoroughly vetted is inexcusable at best. That failure is harming the many CFP certificants who actually do practice with a higher standard. Even more importantly, it’s detrimental to the public relying on the organization’s disclosures.

I have read the CFP Board’s response to The Wall Street Journal’s article and find the following statements to be misleading, unsatisfactory or simply absurd.

  • “The CFP Board continuously improves our processes for the benefit of the public.” The CFP Board ignored data I presented indicating public sanctions came after those of other regulators — and easily could have done the same data analysis performed by the WSJ.
  • ”CFP Board will no longer rely on self-disclosure.” The board had ample evidence, dating back to the 2013 “fee-only” scandal, that self-reporting resulted in false disclosures. Six years later, it seems surprised self-disclosure isn’t working.
  • “CFP Board vets candidates for certification.” Yet the vetting resulted in 6,300 certificants with disclosures on other sites that the CFP Board didn’t bother to review.
  • “CFP Board is different than a government agency or self-regulatory organization.” This is absurd. The CFP Board is willing to spend millions in advertising to the public promoting CFPs as having a higher standard and then hide the fact that those standards can’t actually be enforced. Further, it is misleading to claim that the board’s small $30 million budget is a factor without mentioning the significant percentage that goes to advertising, and Kevin Keller’s annual compensation, which was $1.1 million in 2017, which amounted to a 161% increase over nine years.
  • “CFP Board’s bankruptcy disclosure process differs from FINRA.” If that’s the case, then let the public know it uses a lower standard than other regulators —rather than make false claims of a higher standard.

As you know, for many years I’ve paid my dues and enclosed a request to Kevin Keller, CEO of the CFP Board, that the portion of my dues designated to the advertising campaign instead goes toward the stated priority of “assuring accountability” by actually enforcing standards. Mr. Keller’s latest email response, on April 29 of this year, stated “I’ve talked with leaders in the past, there has been no interest in revisiting that decision,” though he did not respond to my request to name these leaders in order to have open and transparent discussion.

Mr. Keller further explained “our primary goal is to keep certificants out of trouble.” That goal certainly appears consistent with the board’s actions in growing the number of CFPs and enriching management. And the board did protect thousands of certificants from disclosure to the public, including those with felony charges.

But Mr. Keller’s goal is inconsistent with the organization’s charitable mission of benefiting the public.

Mr. Brod, I urge you to take some lessons from the late John Bogle who you worked with for so many years at the Vanguard Group. Mr. Bogle explained one characteristic of a profession as “a commitment to serve the interests of clients — responsibly, unselfishly, and wisely — and the welfare of society at large.” As you know, Mr. Bogle disdained advertising and stated “growth is an outcome, not a goal at Vanguard.”

Mr. Bogle revolutionized the fund industry rather than slowly allowing evolution. I do not accept the excuses from the organization that it will take time for financial planning to evolve to a profession. After 30 years, the organization continues to be exposed as using a lower standard. The revolution must start today!

The public does not benefit from lack of disclosure and transparency. The mission of the CFP Board is not and should not be to mislead the public through advertising. Professions like medicine and law encourage open debate and transparency. The American Medical Association, for instance declared war on smoking and prioritized public health over physicians’ revenue as it lowered the volume of diseases to be treated. Your board has a duty to assure management is placing public well being over the revenue of both the CFP Board and its members.

I wholeheartedly agree with the stated mission of the CFP Board to “benefit the public by granting the CFP certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.” I also agree with the stated strategic priority of “assuring accountability by holding CFP professionals to rigorous standards and by advocating for fiduciary advice, recognition of financial planning as a profession, and effective regulation of financial planners.”

Actions, however, are far more important than words.

I appreciate the discussions we have had and am hopeful there will be meaningful change. But I want to remind the entire board that you have a fiduciary duty of management oversight to assure resources are going toward the mission you approved. There is ample evidence this duty of oversight has been inadequate and is resulting in adverse reflection on the CFP marks and the profession.

Allan S. Roth, CFP

For reprint and licensing requests for this article, click here.
CFPs Enforcement actions Certifications and licensing Regulatory actions and programs Kevin Keller CFP Board FINRA