As expected, a CFP Board disciplinary panel issued a letter of admonition today to the board's former chairman, Alan Goldfarb, claiming that he misrepresented his compensation. He disputes those claims but has decided not to appeal.
According to the letter, a copy of which was obtained by InvestmentNews, Mr. Goldfarb “misrepresented his compensation, first as 'fee-only' and later as 'salary,' on an online financial planner database.”
The board's disciplinary panel wrote that Mr. Goldfarb, who was formerly with RIA firm Weaver Wealth Management LLC, was also a “registered representative and part owner of a broker-dealer. … The [panel] determined that the RIA and the broker-dealer received or were entitled to receive compensation such as commissions and 12b-1 fees.”
Under the board's standards, though, CFPs can only describe their compensation as fee-only “if, and only if, all of the … compensation from all of his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage or performance-based fees,” the letter says.
A CFP professional cannot refer to his or her practice as “fee-only” if any compensation received by either the CFP professional or the professional's employer is comprised of compensation other than fees as defined by the CFP board, the panel wrote.
“Mr. Goldfarb's clients paid commissions and/or fees and not a salary for services rendered by Mr. Goldfarb and/or his employer,” the letter says.
Mr. Goldfarb says he was paid a salary at Weaver Wealth Management.
“Fees came directly from the client and were paid to the firm,” he told InvestmentNews in an interview today. Mr. Goldfarb said he was puzzled over the wording in the letter.
“If the employer receives something … or is entitled to receive something and you [the CFP] don't, you're guilty?” Mr. Goldfarb asked. “Come on.”
Dan Drummond, a spokesman for the CFP Board, declined comment.
Mr. Goldfarb left Weaver Wealth late last year and formed his own firm, Financial Strategies Group LLC in Dallas.
Last November, the CFP Board announced its disciplinary proceeding against Mr. Goldfarb, at which time he resigned from the board.
The letter of admonishment is dated April 2013, but is expected to be released by the CFP Board Tuesday.
It is the mildest formal penalty the board can issue to CFP certificants.
The disputed description of Mr. Goldfarb's compensation arose from a listing on the Financial Planning Association's website.