Guest Post: CFP Board Responds To Wall Street Journal Blogger Who Accused It Of Not Enforcing Fiduciary Standard; Says Incident In Which A CFP Allegedly Charged Client 5.29% Annually Occurred Before Fiduciary Standard Was Imposed

Tuesday, September 25, 2012 15:44
Guest Post: CFP Board Responds To Wall Street Journal Blogger Who Accused It Of Not Enforcing Fiduciary Standard; Says  Incident In Which A CFP Allegedly Charged Client 5.29% Annually Occurred Before Fiduciary Standard Was Imposed

Tags: Advisor businesses | CFP Board | fiduciaries

In a post last week on A4A, I wrote about a scathing criticism of the CFP Board written by a blogger for The Wall Street Journal who is also a CFP licensee. Citing an incident in which he alleged that a CFP professional "double-dipped" by charging a client 5.29% in commissions and advice fees annually on assets in a variable annuity, WSJ blogger Allan Roth accused the CFP Board of giving little more than lip service in requiring CFPs to act in their clients’ best interests. In this guest post, the CFP Board responds. 

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Certified Financial Planner Board of Standards certainly doesn’t consider the fiduciary standard a joke. We take it very seriously we believe that 67,000 CFP® professionals do as well.
Unfortunately, Allan Roth, CFP® has used incorrect presumptions related to a case that he filed on behalf of a client to call into question CFP Board, our fiduciary standard and our enforcement process.
Mr. Roth is presuming that because there was no public sanction against a CFP® professional – against whom he brought a breach of fiduciary duty claim – CFP Board’s enforcement process is flawed and we don’t uphold the fiduciary standard.  What Mr. Roth fails to disclose (or perhaps understand) is that CFP Board did not require our CFP® professionals to adhere to a fiduciary standard until July 1, 2008, which is about three years after the time of the alleged misconduct Mr. Roth wrote about.  We also didn’t receive a complaint from either Mr. Roth or his client until November 2008.
If Mr. Roth’s client brought a similar claim today – under our revised standard – the outcome would likely be very different.  In fact, under our publically-available sanction guidelines, a breach of CFP Board’s fiduciary duty would generally result in a suspension to use the marks for one year and one day.
Contrary to Mr. Roth’s suggestions, CFP Board has been a leader in supporting the fiduciary standard.  We required it more than two years before Dodd-Frank became the law of the land. Beyond the action’s we took requiring it for certification and re-certification, we have been on the leading edge of an effort to create a uniform fiduciary standard of care with more than 10 submissions to the SEC and Capitol Hill advocating this important consumer protection reform.
Getting people to see our point of view is not easy. There was opposition – and still is – from industry organizations and others who feared that this client-first standard would require them to drastically change their business models. Most of those same opponents have now come to realize that a fiduciary standard is good for clients, their business and the markets as a whole. CFP® professionals embrace their fiduciary obligation and have successfully applied it to a variety of business models, whether they are paid by commissions or fees.
The inclusion of a fiduciary standard – along with our other rigorous Standards of Professional Conduct –actually is helping advisors as it does clients.  A recent Aite Group survey showed, for instance, that CFP® professionals are more productive than their peers without the certification. Maybe this is why the number of CFP® professionals has grown by 24 percent over the last 5 years across all business models. And that’s why the CFP® designation is more recognized by the public than all other financial planning designations.
What’s also disappointing is that CFP Board,  in a completely transparent effort to illustrate the strength of our enforcement process, extended an invitation to Mr. Roth to serve as a “panel volunteer” on our Disciplinary and Ethics Commission (DEC) and write about it – something  which had never been done before. Consistent with our standard procedures for all our DEC volunteers we asked him to sign a confidentiality provision and – to ensure that no confidential information was unintentionally included –asked to review a draft of the article in advance.  Yet, Mr. Roth declined to sign it and thus our offer was turned down. Contrary to his assertion, we never required “approval” of the author’s content.
CFP Board is focused on benefiting the public. We are a 501(c)(3) whose designation, standards and enforcement of it are recognized and respected by financial professionals, regulators, lawmakers and the public. We stand behind what we do and our standards, which are the most rigorous of any financial planning designation, with a goal of ensuring that the public knows they are receiving financial services from an ethical and competent financial planner.”



Comments (1)

I rest my case. I had hoped at some point the Board would respond and provide some context. And context is everything. Sadly, Roth failed to do so in his rant and failed then to provide his audience, WSJ readers with crucial information. I have unfortunately had some experience with shooting off my mouth without all of the facts in reaction to a perceived situation. And I discovered that it pays to learn all of the facts and the context before making accusations. Wish Roth had done so. I think he has done more harm than good with his commentary.
mitchellkeil , September 25, 2012

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