CFP Board cracks down on compensation disclosure, revokes a license

The Certified Financial Planning Board of Standards Inc. has revoked the CFP credential of a Florida investment adviser for administrative violations involving the way he described his form of compensation and admonished two other CFPs for mischaracterizing the way they are paid.

The actions mark the first compensation disclosure cases since June 2013.

In a list of disciplinary actions released on April 24, the organization said that on Jan. 15, it took away the CFP mark held by Joseph M. Browne of Summit Wealth Partners in Jacksonville Beach, Fla. The organization alleged that Mr. Browne had misrepresented his compensation as “fee-only” on the CFP Board’s website because he and his firm can receive commissions from insurance sales.

Mr. Browne lost his CFP designation because he did not respond to a complaint from the board within 20 calendar days.

Two other planners were given lesser punishments. Phillip C. Coad of Vermillion Financial Advisers in South Barrington, Ill., claimed that he was a fee-only planner even though he and his firm were entitled to receive insurance-sales commissions. Don G. Stamas of Defender Capital in Charlotte, N.C., also received insurance commissions and was identifying himself as a fee-only planner.

Both Mr. Coad and Mr. Stamas agreed to remove “fee-only” from their profile on the CFP Board site and received letters of admonition.
Mr. Stamas does not dispute the CFP Board’s finding although he conducts almost all of his practice as a fee-only RIA. He added that he “apologized and corrected [his compensation description] immediately.”
The CFP Board’s admonishment, which will stay on his record, doesn’t fairly reflect his “spotless” compliance history, Mr. Stamas said.
“There are certain things that are black-and-white and certain things that need perspective,” he said. “I am very disappointed in how this entire process was handled.”
Mr. Browne and Mr. Coad did not respond to requests for comment.

The disciplinary actions are the latest development in an ongoing controversy over compensation description at the CFP Board.

A former chairman resigned in November 2013 over allegedly mischaracterizing the way that clients paid him in a description on the Financial Planning Association’s website. The CFP Board is the target of a lawsuit by two Florida planners over their compensation description.

Last May, the CFP Board launched a review of CFP profiles on its website to determine whether compensation is being properly portrayed.

Under CFP rules, advisers can claim fee-only status only if they charge fees for their services and are not affiliated with firms that could charge commissions. Fee-only status is coveted because it is generally seen as indicating that an adviser avoids conflicts of interest in providing investment direction.

The CFP Board grants the credential and maintains and enforces related educational and ethical requirements. There are approximately 71,000 CFPs in the United States.

Related Topics: Certified Financial Planner Board Of Standards Inc. (CFP Board)