Editorial

More transparency needed at CFP Board

Nov 18, 2012 @ 12:01 am

+ Zoom

In the two weeks since Alan Goldfarb, the now-former chairman of the CFP Board, resigned amid allegations of ethics violations, the rest of the board, and its Disciplinary and Ethics Commission, presumably have been investigating the situation diligently to find out what really happened.

But we may never know, and therein lies the problem.

The Certified Financial Planner Board of Standards Inc. holds itself — and its designation — out to be the gold standard for financial planners and wants the public to trust it and those who put the CFP mark next to their name on their business card.

That's all well and good, but part and parcel of placing itself in that position is being fully transparent.

We demand transparency from our elected officials, from our regulators, from our corporate leaders, from our markets. Why not from our professional organizations that are supposed to have the public's interests at heart?

The Goldfarb drama unfolded Nov. 2, when the CFP Board, to its credit, issued a news release announcing the resignation of Mr. Goldfarb and the two members of the Disciplinary and Ethics Commission.

According to the release, the CFP Board “became aware of broad allegations that members of the board and other volunteers may have violated provisions of CFP Board's Standards of Professional Conduct.” Further investigations were made, and when presented with the findings, Mr. Goldfarb and the two commission members resigned.

Fair enough. The fact that the CFP Board has a disciplinary and enforcement process that it uses on its own board and management is to be commended.

But generally, from that point on, the situation becomes a black hole — or perhaps a brick wall — with the board saying that disciplinary rules and procedures are confidential, and that only if the proceedings result in a “public sanction” will they be opened for all to see.

That's not good enough for an organization that is effectively telling the investing public: “Trust us, we know what we're doing.”

DISCLOSURE CRITICAL

And the exchange between Mr. Goldfarb and CFP Board chief executive Kevin Keller after Mr. Goldfarb e-mailed a statement to InvestmentNews only makes full disclosure more critical.

In his e-mail, Mr. Goldfarb wrote that the alleged violations involved “representing my compensation as "salary,' which it is, as opposed to "fee and income,'” since he's also a broker-dealer. In a terse reply, Mr. Keller called Mr. Goldfarb's claim “not correct.”

Well, which is it? Only the CFP Board can clear the air, which would nip in the bud any speculation about what's going on.

If the CFP Board wants to meet its mission and not suffer a lingering stain on its reputation, it must come clean. What were the allegations against Mr. Goldfarb and the others (who remain anonymous for some unexplained reason)? How did the investigation unfold, and what specifically did it find? How did the alleged violators respond? Furthermore, what process ensures that a similar problem will not crop up again?

Clearly, investigations take time, and no one expects a full account immediately, even two weeks after Mr. Goldfarb and the others tendered their resignations. But one report of the incident suggested that the earliest that any details will emerge from the CFP Board is next March, when the Disciplinary and Ethics Commission next meets.

That's not good enough.

Perhaps enough advisers can attend the board's interestingly timed Nov. 29 webcast, “Disciplinary Trends & Compliance Tips,” to force some answers. After all, the presenters will be Rex Staples, the CFP Board's director of investigations, and Martin Siesta, chairman of the 2013 Disciplinary and Ethics Commission.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Oct 17

Conference

Best Practices Workshop

For the fifth year, InvestmentNews will host the Best Practices Workshop & Awards, bringing together the industry’s top-performing and most influential firms in one room for a full-day. This exclusive workshop and awards program for the... Learn more

Featured video

Consuelo Mack WealthTrack

How to maximize the effectiveness of your charitable giving

Donor-advised funds let you take the tax deduction for charitable donations now, while postponing when you give the money away. Pamela Norley, president of Fidelity Charitable, and Elda Di Re, partner at Ernst & Young, discuss the strategy.

Latest news & opinion

Will Jeffrey Gundlach's Trump-like approach on Twitter work in financial services?

The DoubleLine CEO's attacks on Wall Street Journal reporters is igniting a discussion on what's fair game on social media.

Fidelity wins arb case against wine mogul but earns a rebuke from Finra

In the case of investor Peter Deutsch, Fidelity doesn't have to pay any compensation, but regulator said firm put its interests ahead of his.

Plaintiffs win in Tibble vs. Edison 401(k) fee case

After a decade of activity around the lawsuit, including a hearing before the U.S. Supreme Court, judge rules a prudent fiduciary would have invested in institutional shares.

Advisers get more breathing room to make Form ADV changes

RIAs can enter '0' in some new parts of the document before their annual filing next year.

Since banking scandal, Wells Fargo advisers with more than $19.2 billion leave firm

Despite a trying year, the firm has said it will sweeten signing bonuses for veteran advisers.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print