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November 09, 2012 at 06:56 AM
The financial planning community was stunned recently by the unexpected announcement that Alan Goldfarb, chairman of the Board of Directors for the CFP Board, along with two unnamed members of the CFP Board’s Disciplinary and Ethics Commission (DEC), had resigned amidst allegations that they had violated CFP Board’s Standards of Professional Conduct.
Critics of the CFP Board were quick to step forward and use the announcement as a moment of weakness and an opportunity to bash the organization. Nonetheless, it’s still notable in a sign of strength that the CFP Board does have an enforcement process, and isn’t afraid to use it—even to the point of ousting its own board chair and some DEC members.
In the long run, though, whether this proves to be a sign of strength or weakness for the CFP Board depends upon the transparency it uses in resolving the matter. While light on the details right now—it is, after all, an ongoing investigation—the real question is how much the CFP Board ultimately discloses about what the allegations were, the process of the investigation, the outcomes of that process, and how the matter was adjudicated, along with whatever steps it intends to take to ensure the problems, whatever they were, don’t happen again. We can’t ask for or expect any answers yet, but we can ask for and expect a commitment, now, for transparency at the end of the process to maintain the integrity of the organization.
The Facts as We Know Them
The press release issued by the CFP Board itself contains most of the details that are known at this point.
The CFP Board became aware of “broad” allegations that members of the Board of Directors and other volunteers may have violated provisions of the CFP Board’s Standards of Professional Conduct. Given that the chair of the Board of Directors was involved in the allegations, the Board created a special committee compromised from their public/independent board members (i.e., those who have no internal ties to the financial services industry) to look into the matter. The special committee in turn retained outside counsel to investigate the allegations and report the findings directly back to the committee.
The conclusions of the investigation and the special committee was that there was “sufficient merit in the allegations against Mr. Goldfarb and the two members of the DEC to refer them for further proceedings under CFP Board’s Disciplinary Rules and Procedures.” When Goldfarb and the others were made aware of the committee results, they resigned from their positions (Goldfarb’s Oct. 30 resignation letter is publicly available).
On Oct. 31, the Board of Directors held a special meeting to elect new leadership, and 2012 Chair-elect Nancy Kistner was chosen to fill the remainder of Goldfarb’s term, in addition to filling her own previously-elected term as Chair through 2013. On November 2nd, the CFP Board issued the aforementioned public press release announcing the incident and the changes.
