The Certified Financial Planner Board of Standards Inc. is holding off on sanctioning a planner for identifying himself as a fee-only adviser even though he appears to violate the organization's compensation description rules.
Rick Kahler, president of Kahler Financial Group, has been an outspoken critic of the CFP Board over its fee-only definition. His firm calls itself fee-only, but Mr. Kahler owns part of his family's real estate business %mdash; an affiliation that would make him a commission-and-fee adviser under CFP rules.
Despite the contradiction, the CFP Board is not taking action against Mr. Kahler, yet.
“CFP Board and I continue to have ongoing conversations in which CFP Board is providing me with guidance on how to properly identify my compensation,” Mr. Kahler said in a statement on Tuesday. “Until CFP Board provides the guidance I have requested, CFP Board will not take any disciplinary action related to identification of my compensation.”
The CFP Board issued a nearly identical statement on Tuesday and declined further comment.
Under CFP rules, Mr. Kahler's stake in the real estate firm, which charges commissions, prevents him from using the fee-only label even though Mr. Kahler himself only charges clients fees for his services.
In a letter last week, the CFP Board told Mr. Kahler that he must drop his fee-only description or risk disciplinary action by the board, according to a post on the
Nerd's Eye View blog by Michael Kitces, a partner and director of research at Pinnacle Advisory Group.
The CFP Board told Mr. Kahler that he must divest his interest in the real estate firm in order to maintain his fee-only status, and Mr. Kahler offered to transfer his ownership to a family member or to bar his advisory clients from doing business with his family's real estate firm, according to Mr. Kitces.
Mr. Kahler did not respond to a request for further comment beyond the statement he issued on Tuesday.
The dispute with Mr. Kahler, who is prominent on Twitter, is
another high-profile compensation controversy that the CFP Board is trying to manage.
It's currently embroiled in a
lawsuit with a Florida planning firm over a disciplinary case involving compensation descriptions. Another compensation case led to the
resignation of a CFP Board chairman in 2012.
Recently, the National Association of Personal Financial Advisors, an organization that promotes fee-only advisers,
banned its members from owning even a small stake in a financial firm that charges commissions.
That was a change from NAPFA's previous membership criteria, which allowed an ownership level of up to 2%. The group requires its members to hold the CFP designation.
