Clear as Mud: The CFP Board’s Blackbox Oversight Process on Ethics

So let me get this straight: the charges in question can’t be disclosed by the Board because the Board says that such charges can’t be disclosed, and they’ll be made public when and if the Board makes them public. In Mr. Keller’s defense, this kind of double talk does seem to be all the rage in Washington, D.C. these days. Still, I can’t help but think that the financial planning profession—not to mention the inside-the-Beltway perception many of us have about the CFP Board—might benefit from appearing less as if the Board is simply hiding its dirty laundry under a rug (sorry for the mixed metaphor).

Here’s a crazy idea: maybe the Board could adopt a system similar to the one that emerged in Europe during the 18^th century. Disciplinary proceedings could be held out in the open, with the charges clearly stated, some evidence of the same and finally a decision made. Oh, all of which is publicly recorded and published so that other members of the profession—and the public—can benefit from knowing exactly what kind of behavior is and isn’t tolerated in a CFP.  Just a thought.

Still, just when I start to wonder whether a profession of financial advisors couldn’t be in worse hands, The American College of Financial Services wades into the fray. Apparently not content to watch the CFP Board stumbling over its own tail, Dr. Larry Barton, president & CEO of The College, felt compelled to issue a “special message”: “This is a very sad day for our friends at The CFP Board of Standards,” he wrote. “…These are serious allegations, of course, and we hope that our profession is not damaged by the charges behind them… …This should be a time for all of us to reflect on how the various organizations that support financial professionals can support one another in a meaningful manner.”

This, of course, is exactly the kind of “support” the CFP Board encourages through its lack of disclosure of any facts: “These are very serious allegations.” Are they? As far as I know, Mr. Goldfarb and the other two board members may have committed the heinous infraction of leaving the registered trademark “R” off the CFP on their business cards. And this from the organization whose competing, but failing, Chartered Financial Consultant (ChFC) mark was magnanimously grandfathered in by none other than the CFP Board. That won’t stop every financial salesperson (not that there’s anything wrong with that) from here to Kalamazoo from inferring that financial planners are a bunch of crooks, from the top on down. (I would like to personally congratulate Dr. Barton for finally endorsing a ’40 Act fiduciary standard for insurance agents and registered reps of insurance BDs, when he wrote: “…we should always put the interests of our clients above out own.”)

If the CFP Board truly wants to be the regulatory body of the financial planning profession (as it lobbied for during the writing of the Dodd-Frank Act), it needs to introduce some transparency into its bureaucracy, so CFPs and the public alike can see that they are, in fact, being protected. Such transparency could also allow Alan Goldfarb and the others accused to have their good names cleared—or not—from what he described as “a misunderstanding.”