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WARNING: This is a sad story of how the CFP Board went from claiming CFPs were “thoroughly vetted” to sanctioning only a tenth of those disciplined by regulators.
Twenty-two years ago, I left the world of corporate finance to become a financial planner. I thought it was a no-brainer to become a CFP certificant. Like the vast majority of CFPs, I was proud of being held to a higher standard, and happy to pay my dues to support a 501( c ) (3) public charity whose mission was public protection through standards and ethics enforcement.
I was also excited to be part of a movement to change financial planning from a sales vocation to a true profession, like CPAs, attorneys, and physicians. In short, I wanted to be held to that higher standard, as I felt regulators did little to protect the public. I loved the CFP Board’s definition of a fiduciary: “one who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client.”
My First Shocking Revelation of Reality
In early 2008, a client came to me suspicious of the products his CFP had put him in. Among them, the CFP had sold the client an annuity a few years earlier. Apparently, the CFP couldn’t decide whether to charge a commission or an ongoing percentage of assets, so he did both. This practice is known as “double dipping,” and the client was paying 5.29% in annual fees.
It was clear the only best interests being served were those of the CFP certificant. Once the multibillion-dollar insurance company and broker-dealer were made aware of the situation, they voluntarily offered the client his money back, plus a very generous interest rate.
The settlement included a confidentiality clause that doesn’t allow me to identify the household name of the insurance company but did allow both the client and me to file a complaint against the CFP certificant with the CFP Board. I was 100% sure the CFP Board would take disciplinary action. I was dead wrong. The CFP Board felt it was consistent with the above definition of a fiduciary.
Behind the Times
To warn the public, I wrote about the case in AARP Magazine. Shortly afterwards, when I met Kevin Keller, the recently retired long-time CFP Board CEO, he told me my piece was “garbage.” He claimed that I was writing about old news and, as of July 1, 2008, the CFP Board enforces the fiduciary standard, but this double dipped annuity was sold years earlier.
To prove it, he invited me to Washington D.C. to be a volunteer panelist on the board’s Disciplinary and Ethics Commission, so that I could write about the process from the inside and personally see how it was now enforced. It came with the condition that I didn’t disclose confidential information such as the names of the certificants. I accepted, and The Wall Street Journal assigned me to write about it.
Unfortunately, just before the panel, the CFP Board presented an unacceptable term: They would get to approve the entire article. No respectable publication would agree to that condition. I wrote about how it fell apart for The Wall Street Journal, and Keller penned a response for the Journal stating “I am so confident of the fairness and rigor of our enforcement process, I extended an invitation to Mr. Roth…”
Keller concluded, “The CFP Board is a 501( c )(3) nonprofit whose mission is to benefit the public and we take that charge seriously by being the only financial planning designation that requires and enforces a fiduciary standard of care. Our designation and our enforcement process is respected by CFP professionals, consumers, regulators and policymakers. It has teeth and it means something. That’s no joke.”
Was I behind the times and was the fiduciary standard enforced after July 1? For years, I examined the disciplinary actions announced by the CFP Board and cross-referenced them with BrokerCheck. Not once did I find the CFP Board took action before a regulatory action or criminal conviction. In other words, the CFP Board had a lower standard. For many years, I paid my dues and always included a note to Keller requesting none of my dues go to advertisement but instead be directed to enforcement.
The Emperor Exposed
It was no surprise to me when, in 2019, The Wall Street Journal exposed the CFP Board for what they were. Through some sophisticated data mining, they demonstrated that the CFP Board doesn’t inform users about customer complaints, regulatory skirmishes and other problems.
The LetsMakeAPlan.org site has been presenting more than 6,300 planners without showing such problems, even though the planners have disclosed them to FINRA. At least 140 faced or currently face criminal charges. The Journal exposed the falsehood of the advertising campaign that asserted investors could “Find a Certified Financial Planner who's thoroughly vetted at LetsMakeaPlan.org.”
A task force determined that the failings identified by the Journal’s investigation resulted from “systemic, longstanding, governance-level weaknesses” at the CFP Board. It further warned that “these weaknesses will inevitably result in a recurrence of the kind of events reported by the Journal unless the Board of Directors acts to implement reforms.” A follow-up piece by The Wall Street Journal stated the CFP Board said it would strengthen its background checks on planners and take several measures to improve enforcement.
Which Road the CFP Board Chose
As I saw it, at this point, the CFP Board had to choose one of two roads. It could be and do what it always claimed it was and did. It could walk the talk, as Keller wrote in The Wall Street Journal, to act as a 501( c ) (3) charity whose mission is to benefit the public.
Or it could admit it was a sales organization much like NAFA, The National Association for Fixed Annuities, a 501( c ) (6). That organization promotes insurance annuities including fixed indexed annuities, the rebranded name for equity indexed annuities still improperly sold to so many seniors. A 501 (c ) (6) is a nonprofit for business associations that exists to help its specific members or industry. In all fairness, other professions have 501( c ) (6) organizations, such as the AICPA, but they aren’t the ones granting licenses.
The tougher road to take would have been to benefit the public and profession. But that would have meant less money going to advertisements and enriching the Board’s top officers — who I felt betrayed the public mission — and more funding going to enforcement. It likely also would have initially meant lower revenue for the Board, as enforcement would have reduced membership revenue. But I believe it would have ultimately led to financial planning being viewed as a true profession benefiting the public and eventually resulted in even more CFP certificants.
The easier road to take was to abandon the mission, pay the top officers even more, and convert to the same 501( c ) (6) entity structure used by NAFA. Which road did the CFP Board take? As you might guess from the title of this piece, it chose the easier road.
A CFP Schism
Though most advisors I’ve spoken to are unaware, in early 2023, the CFP Board split into two entities and converted the CFP Board of Standards (which grants the CFP mark) to a 501( c ) (6) organization with no mention of benefiting the public.
The Board of Directors gave officers hefty raises after The Wall Street Journal article exposed the hypocrisy, with Keller making nearly $1.3 million in compensation in 2024, according to the most recent IRS form 990 available.
Even with the hefty raises and converting to a business organization, it doesn’t mean they couldn’t also enforce the fiduciary standard. Have things improved since the 2019 Wall Street Journal piece? An article by Elijah Nicholson-Messmer last July in Financial Planning examined this issue in a similar way to what the Wall Street Journal had previously done. It found:
- Over 9,000 CFPs who appear as clean on the LetsMakeAPlan.org site have at least one disclosure on BrokerCheck. That’s up from 6,300 in 2019.
- More than 7,300 have faced formal complaints from their client, up from 5,000 in 2019.
- Nearly 1,000 CFPs have some form of criminal disclosure, up from the 140 noted in The Wall Street Journal, and face or faced felony charges (though it’s unclear whether the more recent criminal disclosures were all felonies).
In the article, the CFP Board stated that its sanctioning process is intended to be both credible to the public and fair to CFPs, who can sometimes receive disclosures on their BrokerCheck profiles through no fault of their own.
I asked Tom Sporkin, the managing director of enforcement, whether that is fair to the consumer. I received only general responses from marketing and communications staff. The LetsMakeAPlan.org site does allow a consumer to find disclosures if they know what to look for.
Though I suggested the interface include some version of the following example right under the certificants name, the marketing and communications group did not agree.
JANE DOE
CFP Board Public Disciplinary History
None
Disclosure Under CFP Board’s Prior Bankruptcy Disclosure Procedures
None
FINRA’s BrokerCheck Public Disciplinary History
Yes – settlements paid
SEC’s Investment Advisor Public Disciplinary History
Yes – settlements paid
The CFP Board of Standards Today
Today, the CFP Board runs an advertising campaign stating “CFP professionals are committed to acting in your best interests. That’s why it’s got to be a CFP.” But the CFP Board puts its own interests ahead of the public. This literally gives license to those certificants with disciplinary histories to falsely claim they are putting the client’s interests first. The CFP Board knows this. If “public awareness” were really the purpose of the advertising campaign, it should make the public aware that it uses a lower standard than financial regulators and inform the public how to easily check out disciplinary history.
Meanwhile, the CFP Board continues to raise fees to certificants. Prominent planner Michael Kitces states that, including hidden fees, the CFP Board charges CE providers like the site Kitces.com for each credit awarded. As a result, Kitces.com's bill has soared 2,000%. Kitces asserted that the Board is blending church and state by putting accreditation and education under its own roof, a clear conflict of interest.
Today, the mission of the CFP Board of Standards, a 501( c ) (6) nonprofit organization, is to credential competent and ethical financial planners, uphold CFP® certification as the recognized standard, and advance the financial planning profession. The mission is no longer to benefit the public. Selling out the public dooms financial planning as a profession. That’s horrible for the vast majority of certificants that want to be held to a higher standard.
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Allan Roth is the founder of Wealth Logic, LLC, a Colorado-based fee-only registered investment advisory firm. He has been working in the investment world of corporate finance for over 25 years. Allan has served as corporate finance officer of two multibillion-dollar companies and has consulted with many others while at McKinsey & Company.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.