The Certified Financial Planner Board of Standards sent a letter Wednesday to all 70,000 CFP certificants explaining a new investigative process the Board will take to identify certificants who inaccurately disclose their compensation methods on the Board website’s “Find a CFP” tool.
Board Chairman Ray Ferrara, CFP, said in an interview Wednesday that the investigation will begin with those who call themselves fee-only advisors “because that’s where there’s the biggest opportunity for confusion and potential abuse.”
The investigation will be conducted, said Ferrara, “on a risk-adjusted basis, randomly” selecting certificants who have ticked the “fee only” box on its website, then consulting information “in the public domain to make sure the compensation they’ve disclosed is what’s consistent with their actual business practices.” That information, said Ferrara, will start with an “informal check-in” with the certificant but will also include “social media, a website, a form ADV, anything else that we could Google” about the certificant.
CEO Kevin Keller said in the same interview that “our real objective is to help facilitate compliance. It’s not to play ‘Gotcha!’ or catch people doing things wrong but to help them comply with our standards.”
In the letter, the interview and in an op-ed in Investment News, Ferrara admitted that the Board “could have done a better job” in “rolling out our Find a CFP tool, especially when we added compensation as a choice.” He also said that “when we recognized there might be multiple people who did not have the proper box checked” concerning compensation on the site, “we made a decision and took down all 8,000 and sent out a notice, said these are our rules, double check and put yourselves back up in the proper box.” In addition, “at that time we said there would be additional steps taking place, and if we find anyone has still misrepresented their compensation we might open up an investigation.”
The issue with the CFP Board’s compensation came to light first with the departure of former CFP Board Chairman Alan Goldfarb and three other Board members following a sanction over their failure to comply with the Board’s fee-only definition, and most notably via a lawsuit filed by certificants Jeff and Kim Camarda of Camarda Wealth Advisory in Fleming Island, Florida, who also fell short of the Board’s fee-only strictures.