One of the best ways to stay out of hot water is to learn from the mistakes of others. That’s the theory behind National Ethics Bureau’s Rogue Advisors feature, which appears monthly in Senior Market Advisor‘s Market Conduct & Suitability e-newsletter and on SMA’s website. Now there’s another valuable resource: Case histories from the CFP Board of Standards that illustrate what can happen when an advisor violates legal or ethical standards.
“The CFP Board is opening its file cabinets,” said CFP Board CEO Kevin R. Keller. “The ultimate goal of putting this sensitive information online is both to improve our transparency as a standards setting body for the financial planning profession and to provide a new user-friendly resource to our CFP certificants,” he said.
By going to the board’s case history page, you can search by type of disciplinary outcome, keywords, standard violated and type of disciplinary matter. Although the case histories are anonymous, reading them can help you see where other advisors have crossed the line into unethical or illegal conduct–and how they were punished.
Here’s a representative case we found in the database. It deals with an advisor who:
- Made misrepresentations to clients regarding fees, sales charges and his association with a firm that he was not registered with;
- Made misrepresentations to a state regarding his financial advisory service activities;
- Misrepresented to a client that he would perform a requested transaction, which he did not perform for a month;
- Made false attestations on his CFP Board Declaration Form;
- Failed to disclose annuity surrender penalties to a client;
- Failed to ensure that the policy receipt of a client’s annuity contract was signed;
- Signed a form for a client that required the signature of his broker-dealer’s management;
- Borrowed money from clients;
- Made unauthorized transactions in a client’s account and
- Did not research surrender charges on annuities.
According to the case history, the CFP board’s Disciplinary and Ethics Commission decided to permanently revoke the advisor’s right to use the CFP trademarks. Upon appeal, the commission instead imposed a two-year suspension. Two years later, when the advisor petitioned for reinstatement, the Commission refused.
For more information about the CFP Board’s Standards of Professional Conduct, visit www.cfp.net/certificants/conduct.asp.