CFP Board moving ahead with plan to strengthen enforcement by end of year

In the meantime, the organization is checking backgrounds of CFPs one-by-one as they renew their credentials

Oct 17, 2019 @ 4:28 pm

By Mark Schoeff Jr.

The Certified Financial Planner Board of Standards Inc. will release a plan for strengthening its enforcement operation by the end of the year, a board leader said Thursday.

The CFP Board is taking a deeper look at enforcement through an independent task force headed by Denise Voigt Crawford, former Texas securities commissioner. The panel was established earlier this year following a Wall Street Journal article that took the board to task for omitting negative information on its website about CFPs. The website is designed to help investors find CFPs to hire.

CFP Board Chairman Susan John said the task force has been charged with bringing to the board "actionable recommendations that ensure the integrity of our process going forward."

The board hopes to get the task force report in time for its November meeting.

"I am going to commit to you now that we're going to develop a plan for action around those recommendations, and we'll have that released by the end of the year," Ms. John said at the Financial Planninng Association annual meeting in Minneapolis. "We're very serious about this. We want to absolutely make sure that we don't have anything like this ever happen again."

In the meantime, the CFP Board is putting a lot of manual labor into updating online profiles of CFP certificants to reflect their disciplinary history.

The board is no longer taking the word of CFPs about their disciplinary problems. Instead, when CFPs renew their credentials the organization is double checking Securities and Exhange Commission and Financial Industry Regulatory Authority Inc. records itself.

"If there was a cardinal sin in the process, it was relying on self-disclosure once a person becomes CFP certified," CFP Board chief executive Kevin Keller said Thursday at the FPA meeting.

Combing through SEC and Finra databases is a cumbersome process.

"We're working on a technology solution to scrape data from BrokerCheck and the [Investment Adviser Public Dislcosure]," Mr. Keller said. "In the meantime, it is literally a manual process. There are 12 full-time temporary people overseen by our professional standards and legal department who are working 40 hours a week to review backgrounds as people renew their CFP certification."

Questions about the CFP Board's enforcement capabilities have arisen as the organization toughens the investment-advice standard for the credential.

Earlier this month, the CFP Board put into effect a rule that requires all CFPs, including brokers, to act as fiduciaries to their clients whenever they provide investment advice. That's a wider mandate to act in a client's best interests than previously applied to the mark, when being a fiduciary was limited to times when a CFP was doing financial planning.

The CFP Board will begin enforcing the new standard on June 30, the same day that financial firms must implement the SEC's advice reform rules.

The SEC's rules revolve around Regulation Best Interest, which is designed to raise the broker standard above suitability. But the SEC is not imposing a fiduciary standard on brokers, which the CFP Board will be doing for brokers holding the mark.

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The CFP said it will expect mark holders to be fiduciaries no matter their business model.

"We've decided that the standards are what the standards are," Ms. John said. "We're not bending them for anybody. We've been working with all different types of firms — insurance firms, brokers, fee-only firms — [on] how they can create an atmosphere within their organizations that will allow CFPs to practice as fiduciaries."

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