Late last July Jason Zweig and Andrea Fuller reported on the front page of The Wall Street Journal how CFP Board has failed at monitoring certificant listings at their LetsMakeAPlan.Org consumer referral website. Zweig and Fuller found certificants whose disclosure histories appeared clean on CFP Board’s site to have, among other causes for criminal felony charges and other regulatory issues.
Marilyn Mohrman-Gillis, then managing director at Certified Financial Planner Board of Standards Inc., participated in events with Democrat congressmen and the Obama Administration’s Department of Labor to advance the DOL’s “Fiduciary Rule,” which sought to restrict IRA rollovers. Since the Trump administration and before there has been little advocacy from CFP Board to advance access to financial planning.
© 2016 Bloomberg Finance LP
This isn’t the first time CFP Board has failed to “benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.” In the past CFP Board’s website allowed certificants who clearly held sales licenses to market themselves as “fee-only” (and, even today CFP Board allows advisors to work for firms which falsely call themselves “fee-only” while ignoring that certificants who work for these firms know they are misleading the public).
The response is what I’ve come to expect from CFP Board as political in nature – do not take responsibility, yet still take action. Their reply stated, “In some cases [T]he Wall Street Journal raises important issues, which we are addressing.” A more comprehensive review of what happened should have look not only at the ‘important issues’ that they failed the public and certificants on, but rather their total failure to “uphold [CFP® certification] as the recognized standard of excellence” itself should have been addressed.
Over the last decade under CEO Kevin Keller, CAE, CFP Board has had several other failures, as its leadership moved it starkly away from its core mission toward becoming a much more partisan organization that markets itself as a credentialing firm.
Below are a few examples of this move towards to politicization of personal financial planning at CFP Board:
Keller has been accused of collusion to interfere with those who may offer a higher standard of care to the public, which would reduce CFP Board’s control over the delivery of financial services. This idea of management of a profession is central to the issues at CFP Board, as they recently approved a new Code of Ethics and Standards of Conduct which includes far more rules over specific behaviors, though those rules are so general in nature that they will be open to political interpretations. Many – like their “Fiduciary Duty” on rollover recommendations – are not only too vague know if a certificant is meeting the standard, but they are impossible to meet. CFP Board and every certificant who has worked with clients knows the data they request is impossible to gather, but also irrelevant as I note below they assume the financial planning has no value beyond what the certificant proves.
Nearly all of CFP Board employees and volunteers seem to be of one political mindset – that regulators or CFP Board itself must control the delivery of advice and financial products, rather than allowing for the free market to innovate and bring the best ideas forward. I ran a search of political donations by CFP Board employees and volunteers and of all of the dozens of donations made nearly all went to Democrats, with only one donation by one member made to a Republican (who also donated to Democrats). A social media search of non-donors overwhelmingly reveals Democrat-leaning individuals at CFP Board.
Political volunteers like Barbara Roper of the Consumer Federation of America have overwhelmingly promoted negative views of financial advisors, adding to the public’s distrust of financial planners.
CFP Board itself seems to promote this negative view of advisors, which I’ve experienced personally as a past volunteer. This article promoting the need for a positive message of advisors was provided to me as one of a few reasons that ended my volunteer tenure that also seemed political in nature.
CFP Board pushed for the prior Democrat administration’s Department of Labor “Fiduciary Rule” with no pushback or contributions to the rule to increase financial planning or ensure a level playing field for planners. Many recognized the increased cost that would come to advisors would harm the independent advisor’s affordability, yet CFP Board was for a rule without modification that would have reduced demand for their certificants, and especially among low-balance savers and moderate-income earners. The threat of this rule and other regulations have pushed consolidation of firms and products, as regulators – like CFP Board – use vague and personal interpretations of what it means to be a “fiduciary.”
Investors are more and more given simplistic and “safe” advice, rather than a more complete menu of planning and investment solutions. This increasingly is forcing investors to go it alone rather than secure products that have been vetted through multiple layers of compliance from their advisor.
During the Trump administration, CFP Board has made no contributions to the national dialogue around proposed changes to the retirement system and again has had no position to advance financial planning advice or lead on the confusion multiple state fiduciary rules are just now beginning to create. I originally supported CFP Board’s New Code of Ethics and Standards after speaking with an employee of CFP Board who assured me they intended to ensure financial planning would lead and educate others in the fiduciary conversation. Instead, the idea of “fiduciary” has officially died, in large part due to the confusion CFP Board has added to the discourse.
While appointing itself as the arbiter of “fiduciary” behavior among its certificants, CFP Board has created a political standard that starts with the belief that the engagement has no value that the certificant cannot prove; obviously not the attitude that one would expect from a professional certification that claims to have value to the public. The political position CFP Board has taken is to issue vague rules that target advisors in certain circumstances, such as advisors who perform 401(k) and retirement account rollovers while providing no guidance for how an advisor can meet those rules.
Imagine a world where people needed accounting help, but the AICPA (which, runs a far more effective marketing campaign for financial planning than CFP Board) would not allow a CPA to prepare a tax return unless the tax savings from having the return prepared was at least 100% of the cost of the return.
Now, imagine that the AICPA creates a liability for the CPA to know such a thing prior to completing the return! This is akin to CFP Board’s standards for advisors who recommend rollovers (but, apparently only those CFP® certificants who work directly with people, not those who work for firms that onboard clients electronically or by other means).
CFP Board has been accused of interfering with attempts to advance fiduciary knowledge, denying education to certificants of providers discussing more stringent fiduciary rules, colluding to choose fiduciary research that benefits their interests from volunteer firms, and using its monopoly on continuing education to deny critics the right to create fiduciary CE courses.
CFP Board promotes and funds young advisors who push intersectionality, identity politics and Social Justice under the guise of promoting diversity. These ideas are exclusive to the far-left of the political spectrum and are far left of even the average liberal and where the vast majority of advisors and the public at large.
CFP Board’s funding of the 2050 Trailblazers podcast is just one example of this. The name alone refers to a belief that by 2050 whites will no longer be over 50% of the population of the United States. The podcast has episode titles like “Using Your White Privilege,” which is a theory of intersectionality.
CFP Board seems to be advancing a new educational track in “client psychology,” where one certificant volunteer has cumulatively less than one year of experience as a registered investment advisor or broker at three different firms, and whose posts on social media are nearly exclusively about “white supremacy” and other intersectional ideas on race and racism. CFP Board has other advisors they support and fund also with little experience, but who are vocal on social media and in their own publications about “white fragility” and other intersectional concepts.
Intersectionality is a political movement, and one at odds with the compassion, credibility, knowledge, and fiduciary duties required to be a financial advisor. As CFP Board continues to fund and support political movements they not only lose focus of their mission, some have even suggested they put at risk their status as a 501(c)(3) nonprofit.
As a clearly politically-driven institution, CFP Board’s use of volunteers, their promotion of ‘fiduciary’ rules, and refusal to accept common standards of governance shows it seeks to control, not expand, a profession. We see this in their interest in diversity as a divisive political tool. Rather than advancing diversity in positive ways like removing the worthless requirement that certificants hold a bachelors degree, not imposing vague threats onto advisors who may work with lower balance clients as with their vague rollover “fiduciary” rule, and returning to funding outreach programs rather than intersectionality and political actors.
Financial planning is a creation of the market economy which came about to provide competent advice across several facets of personal finances. Organizations like CFP Board were created around that concept to provide the public with a way to find a credible advisor.
If CFP Board continues on this path of politicizing their certification the public will find the goodwill that financial planners have built will turn to consumers was nothing more than another bait-and-switch actor in personal finance. The reason CFP Board failed and will continue to is that it refuses to commit to fiduciary governance behaviors for itself and to have leadership that is diverse in their ideas and politics, but committed to the stewardship of the quality of their marks and a financial planning profession for the certificants and public good.
And, if that does not change, the future financial advisor may not wish to be a CFP® certificant, but may look to some other way of showing their commitment to sound governance, stewardship and leadership behaviors.
I reached out to CFP Board via email on May 17, and on other occasions, to discuss the issues above and as of this publication have not received a response.
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