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September 18, 2013 at 09:50 AM
Why are things involving the CFP Board rarely simple?
Case in point: the already much-covered forced resignation of former Board chairman Alan Goldfarb, who was sanctioned by the Board for improperly describing himself as “fee-only” on the FPA’s planner search site (see my ThinkAdvisor blogs of June 12, June 19, Aug. 28 and Sep. 11). As if that case wasn’t complex enough already—involving issues around the definition of ‘fee-only,’ ‘salary compensation,’ ownership in a ‘related party,’ and apparently, the first-ever public sanction of a CFP for a “fee-only” disclosure infraction.
Now, it turns out that the Board only was made aware of Goldfarb’s self-description by another planning firm that was facing a “fee-only” sanction as well, which availed itself of the age-old tactic that the best defense is a good attack on one’s accusers. This latest revelation raises new questions about rushing to judgment, the definition of a “related party,” the Board’s right to regulate its own designation, and one of my personal favorites, doing the right thing for the wrong reasons.
It all started back in March 2011, when the CFP Board received a “complaint” about Camarda Wealth Advisory Group, in Fleming Island, Fla., owned by CFPs Jeff and Kimberly Camarda. It seems that the Camardas also own an insurance agency—Camarda Consultants—and yet describe their wealth management firm as “fee-only” in their client disclosures.
When they were informed of the Board’s investigation and its intention to sanction them for “misusing the term fee-only,” the Camardas reportedly went on the offensive. First, they filed a lawsuit in Florida state court to block the release of their sanction letter, and then filed a suit in Federal court in Washington, D.C. to challenge the Board’s sanction, described in a statement as: “an unfair and capricious process, one that was initiated on an anonymous, groundless, unsigned complaint that was not even investigated by CFP Board.”
But the Camardas didn’t stop there. They also did “some research on Google and provided specific examples of inconsistencies we found, and used these to demonstrate to staff what we thought was wrong with the system…We did not file official complaints against any [discipline and ethics committee members] or Board members…We never had any desire to see anyone disciplined.”
