In the wake of a scathing July 29 Wall Street Journal article by Jason Zweig, the Board of Directors of the Certified Financial Planner Board of Standards today announced the creation of an independent task force to examine and modernize its enforcement practices.
Denise Voigt Crawford—a securities consultant and former 17-year Texas Securities Commissioner who currently serves on CFP Board’s Board of Directors as a public member—will chair the task force.
Susan John, CFP and Chair of CFP Board’s Board of Directors said the Board will provide Crawford and the task force the resources it needs for its work. Crawford will also have full authority to appoint members of the task force.
The WSJ article, titled “Looking for a Financial Planner? The Go-To Website Often Omits Red Flags,” says the CFP Board of Standards’ LetsMakeaPlan.org website doesn’t inform users about customer complaints, regulatory skirmishes and other problems.
The article adds that the CFP Board, which controls the CFP label “coveted by financial planners,” boasts of its high standards and has touted its directory of professionals as a place where people can find a screened, skilled and trustworthy financial planner.
“What they won’t find there is any indication that thousands of the planners bearing the board’s seal of approval have had customer complaints or faced criminal or regulatory problems—often directly related to their work with clients. More than 60 have filed for bankruptcy within the past decade although the website says they haven’t disclosed such an event in the last 10 years,” it states.
“The LetsMakeAPlan.org site has been presenting more than 6,300 planners without showing such problems even though the planners have disclosed them to the Financial Industry Regulatory Authority, according to a Wall Street Journal analysis of more than 72,000 profiles on the website.”
The paper compared data on the LetsMakeAPlan.org site against records kept by industry-funded watchdog FINRA, which has the legal authority to regulate brokers.
Among the planners the WSJ’s analysis flagged, more than 5,000 have faced formal complaints from their clients over investment recommendations or sales practices, and hundreds have been disciplined by financial regulators or left brokerage firms amid allegations of misconduct. At least 140 faced or currently face felony charges.
Article spurs reaction, action
In announcing the formation of the task force on Wednesday, the CFP Board said the task force will look into, “among other factors, some important issues raised by a Wall Street Journal article concerning enforcement of CFP certification and the search function of our consumer-facing website, LetsMakeaPlan.org.”
The CFP Board was also quick to address some specific issues it had with the article, releasing a statement the same day the article was published. From it:
“The Wall Street Journal’s article evaluating CFP Board’s disclosure and enforcement standards, among other things, compares CFP Board to a self-regulatory organization. While the article raises important issues, it overlooks critical differences between CFP Board and regulatory organizations.”
The CFP Board’s complete response to the article can be found here in its July 29 public statement.
CFP Board Chair John said the task force’s recommendations will be quickly considered.
“Our ethical and competency standards give meaning to CFP certification, making it the pre-eminent financial services certification for the public, advisors and their firms,” John said. “Along with our high competency and ethical standards comes the need for an equally robust enforcement program. We look forward to receiving the task force’s actionable recommendations, which will strengthen the value of CFP certification.”
The creation of the task force drew quick praise from high-profile CFP certification holder Michael Kitces on Twitter:
“Glad to FINALLY see the @CFPBoard taking steps to modernize its enforcement of the CFP Practice Standards, after a blockbuster @jasonzweigwsj @WSJ article yesterday highlighted long-standing gaps practitioners have complained about for years.”
Immediate consumer website changes
Importantly, the CFP Board noted that in addition to reviewing changes in its processes currently underway, it has taken “immediate steps to improve its enforcement processes and consumer website,” including:
- No longer solely relying on self-disclosure of CFP professionals;
- Checking FINRA’s BrokerCheck and the SEC’s IAPD each time a CFP professional renews; and
- Providing consumers access to BrokerCheck and IAPD information on LetsMakeaPlan.org and CFP.net/verify.
As CFP Board’s new Code of Ethics and Standards of Conduct goes into effect on October 1, 2019, the organization said it will continue to evolve its enforcement efforts “to support the standards we’re setting for the benefit of the public.”
“I applaud the Board of Directors leadership in taking this important step and I look forward to executing recommendations from the task force and Board,” said Kevin Keller, Chief Executive Officer of CFP Board. “In the meantime, we will continue to adopt measures that strengthen our enforcement program so that all Americans can have the confidence and security that comes from working with a CFP professional.”
Widely recognized by the public, consumer groups and financial services firms as the standard for financial planning, CFP certification is held by nearly 85,000 people in the United States, including stockbrokers, insurance agents, financial planners and investment advisors who help millions of Americans plan for retirement, manage their household budgets and debt, minimize taxes and save for college.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
