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CFP Board Restructures to Improve Brand, Enforcement Efforts

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The Certified Financial Planner Board of Standards has approved changes to its governance, enforcement and risk management practices to help the organization enforce its new code of ethics and standards of conduct.

The measures demonstrate that the CFP Board “is putting in place new governance and oversight structures intended to support ramping up its enforcement efforts, and continuing to grow the credibility and brand of the CFP marks (and the CFP Board as an extension of that),” said Michael Kitces, an industry blogger and head of planning strategy at Buckingham Wealth Partners, in an email sent to ThinkAdvisor Thursday.

The efforts build on shifts the group has been making over the past 14 months in the wake of a Wall Street Journal report on how the CFP Board website for investors, LetsMakeAPlan.org, omitted “that thousands of the planners bearing the board’s seal of approval have had customer complaints or faced criminal or regulatory problems — often directly related to their work with clients.”

In a statement, Jack Brod, 2020 chair of the organization’s board, explained, “Modernizing our organization — particularly our governance practices, enforcement program and enterprise risk management — is an essential part of our work as a professional certifying and standards setting body.”

Brod added: “Over the last few months, and with the assistance of consultants from a global consulting firm, the Board discussed and agreed on essential actions to improve our governance of CFP Board.”

The changes were shaped by members of CFP Board’s Independent Task Force on Enforcement, announced last September.

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Ron Rhoades, director of the Personal Financial Planning Program and assistant professor of finance in the Gordon Ford College of Business at Western Kentucky University, says the changes show that the CFP Board “continues to evolve in a positive direction.”

Rhoades added that he’s “especially pleased to see the Appeals Committee’s scope expanded to include oversight of the ethical standards and their enforcement,” according to remarks he shared via email.

Kitces agreed that the governance — and appeals committee changes — are positive. “Much of it simply appears to be a formalization of what were already informal or existing processes, though,” he explained.

The most notable aspects “are the expansion of the Appeals Committee to have a broader scope of Code and Standards Enforcement (which is consistent with the CFP Board’s indications that it intends to take enforcement of its standards more seriously now that its new ‘more fiduciary’ standard is in place),” Kitces said.

The transition of the Audit Committee “to also be responsible for assessing enterprise risk” makes sense, he explained, “given the CFP Board’s recent PR challenges, such as the … Journal article last year highlighting CFP certificants who had disciplinary records on BrokerCheck but a ‘clean’ record on the CFP Board’s website.”

The new Audit and Risk Committee “would ostensibly be expected to identify and then mitigate” such an enterprise reputational risk challenge, he added.

Kevin Keller, CFP Board’s CEO, added that the improvements “support CFP Board’s ongoing evolution as the professional body for personal financial planners and reinforce the consumer confidence that comes from working with a CFP professional.”

The changes include reducing the current four-year board term to three years, allowing for a maximum of two consecutive terms.

The CFP Board currently sets, upholds and enforces competency and ethical standards for over 87,000 CFP professionals.

See: CFP Board Is Now Enforcing New Code of Ethics and Standards of Conduct