Questions and rumors fly as the CFP Board continues to remake itself.
After a year's worth of changes that has seen it's
staff cut by 60% and many of its core operations put under intense
scrutiny, it's safe to say the Certified Financial Planner Board of
Standards is in the midst of remaking itself.
But what's far from clear is just what the new CFP Board will look like when everything is said and done. All the unknowns, in fact, have created their own problems for the board.
Earlier this year, the CFP Board found itself in the position of having to counter a wave of speculation and rumor that included whispers about the board possibly declaring bankruptcy, eliminating or shrinking its registered education program and moving its headquarters from Denver to Washington, D.C.
In an e-mail this past summer, CFP Board Chair-elect Barton Francis, of Pricewater-houseCoopers LLP in McLean, Va., rebuffed these and other rumors, blaming the mess on a communications failure between the board and its constituents. "I am confident that we will cure our communication problems and have you comfortable with our progress by the middle of next year," he said.
Observers say communications have improved somewhat since then, but as the CFP Board continues its re-evaluation process, speculation and the feeling of uncertainty continue. This is most evident in the area of education-an area of operations that the CFP Board has said will be under a top-to-bottom review in 2006.
These operations include the CFP Board's role as overseer of more than 300 CFP Board-registered education programs at 200 higher education institutions, which fulfill the education requirements of those wishing to hold the CFP mark. It also encompasses the certification exam given to those seeking CFP credentials.
The board's review of its education-related operations appears to be open-ended, with CFP Board CEO Sarah Ball Teslik saying it could lead to a continuation of the status quo, a reduction or an expansion of the board's role. An education task force was appointed at a recent board meeting, she says.
"We're going to get a lot of interesting minds in the same room to say, 'If we were creating educational operations today, what would they look like?'" Teslik says, adding there are significant limits on how much "we can specify what educational programs can do. We can't run them ourselves."
But it's the open-ended nature of the review that has some CFP education program directors worried. Somnath Basu, director of the CFP-registered finance curriculum at California Lutheran University in Thousand Oaks, Calif., says that although communications with the CFP Board have improved, some worries persist.
Among the concerns is how the deep layoffs in CFP Board staffing since last December have impacted the education programs. Staffers who resigned as part of the downsizing included the CFP Board's director of academic programs, the head of exams and the staffer who assisted program directors with marketing.
"That is directly related to education," Basu says of the reduced CFP Board staffing. "All of these people we have been dealing with all these years have lost their jobs or resigned, and we really don't know any more who we need to go to when we have questions."
Another CFP Board initiative that is being watched closely is the board's review of its ethics code and practice standards, and the possible merger of portions of both documents that are deemed to be redundant. Underlying the review is the concern that there is too much overlap between the ethics code and the practice standards, which are supposed to be two distinct documents, each with a different purpose, CFP Board officials say.
"The general thinking is the code of ethics should be aspirational and the practice standards should be enforceable," Francis says. "But there are elements of each in each document."
Teslik says most of the work will consist of reorganizing rules and codes that are already on the books, but there will be some substantive changes.
One such change will address a loophole that allows CFP certificants to avoid the application of the board's practice standards on their business by stating that they are not practicing personal financial planning. The board's rules state that the standards are only applicable to those practicing personal financial planning.
"Increasingly, they are stating that they are not practicing personal financial planning," Teslik says. "We found ourselves in a situation where the board could not apply our practice standards to most of our certificants."
There is another reason the CFP Board's internal changes have created a stir: They are happening after the CFP spent years operating under the status quo. Some veteran education program directors, for instance, say this is the first time they ever recall the CFP Board reviewing its education operations.
Francis says the self-scrutiny that's going on at the CFP Board shouldn't be considered big news. It should be considered business as usual, he says.
"In order for the board to fulfill its responsibilities, it needs to have a clearer long-term vision," he says of the program reviews. "We think it needs to be done and is part of our job."
Francis undoubtedly is right. But the CFP Board has a long history dating back more than a decade of surprising licensees with new initiatives, ranging from the initial adoption of practice standards to its proposal to launch a new Associate CFP designation, which was soon dubbed "CFP lite" and subsequently aborted.
During the 1990s, the organization was headed by Robert Goss, an attorney with extensive experience in regulatory affairs who created many subsidiary boards as part of the CFP Board and, as much as anyone, helped put the CFP mark on the map. Goss understood that if the CFP Board was ever to earn credibility among financial regulators in the nation's capital it would have to create a certain amount of tension between the organization and its licensees.
But Goss had one serious flaw: his penchant for secretive dealings behind closed doors. When the CFP Board sprung its Associate CFP proposal on mark-holders in 1999, the outrage was overwhelming and he left the post a year later.
So in some ways the changes that have shaken the CFP Board ever since Teslik was hired as CEO of the organization in September 2004 are just par for the course. Everyone who has met Teslik comments on her intelligence, though some worry about her listening skills. Those fears are based as much in the organization's long history of failing to listen to licensees as they are to brief interactions with Teslik. Formerly the executive director of the Council of Institutional Investors-where she gained the reputation of being a tough, no-nonsense administrator and a skilled lobbyist-Teslik was hired after an executive search that took slightly more than a year. Her immediate predecessor, Lou Garday, was former executive of Burnham Pacific, a real estate investment trust, who resigned abruptly in the spring of 2003 after an ineffectual two-year tenure in which he was frustrated by the board's interpretation of its mission and its status as a 501 c (3) nonprofit organization.
Teslik wasted little time getting down to the job of reshaping the CFP Board. Just a little more than a month after starting her job on November 1, she lopped a third of the organization's staff off the payroll.
Her actions confirmed the views of many former board members that the staff was bloated, though Teslik avoids saying it outright and has declared the notion is unfair to former employees. Her first round of cuts targeted the board's information technology and external communications departments, which she says were rife with redundancies and duties that could be outsourced more cheaply. She cited as one example of wasteful spending the hiring of three people to read newspapers to search for trademark violations and stories about the CFP Board. Some believe that former employees may have been the source of bankruptcy and other rumors.
In conjunction with the layoffs, she also embarked on a plan to put many of the CFP Board's data and services on the Web-an effort that is still underway. In August, another round of staff cuts reduced the CFP Board's staff to 30. The staff numbered 78 when she was hired.
"There are not any more layoffs planned at this point," she says. Although it's operating with a reduced staff, Teslik says the CFP Board's operations are more efficient.
"It's an office where everyone here is 90% or better of what I consider a star employee to be," she says. "The idea is to identify stars, keep stars, then try to have an environment where they will want to stay for their entire career."
The layoffs, however, have played a large part in the rumor and speculation that has been dogging the CFP Board this year. Among the whispers were that the reductions were to stave off a financial crisis, and that the shrunken staff would be moved to Washington, D.C.-two rumors that Francis flatly denies.
But the communications problems, which predate the tenures of Teslik and Francis, continue to fester-and not just with licensees. Education program directors, meanwhile, state that they were never informed of the layoffs that impacted their operations, and still haven't been clearly told if the personnel will be replaced or not.
"We were not told they were gone" by the CFP Board, one director says privately. "These people, because they knew some of us, told us they were going."
Teslik acknowledges that the reductions in education program staffing have caused worry and speculation among program directors, and she could not say when or if any of the personnel would be replaced. Education staffing, she said, will be dependent on the recommendations of the education task force that are expected next year.
The CFP Board has enough education staff left to continue the status quo, which she considers to be minimal to begin with. She notes that the CFP Board is not an accrediting body and has never conducted site visits of its affiliated programs. "Our current involvement is actually very limited," she says. "We are continuing to perform the functions we performed when we got here."
As for the CFP Board budget, Teslik says it is in the black for the first time in two years. "We're not living on borrowed money," she says. "When I got here, we had no reserves."
She says the board is also trying to improve its communications with its members, education program directors and the public. The board will be holding an annual meeting, she says, that will be similar to a corporate shareholders meeting, as well as increasing the frequency of its online newsletter. Additionally, most of its board meetings are now open to the public, which is rare among similar organizations.
For a newcomer to this profession, Teslik also understands some of the long-simmering tension arising from the board's goal of protecting the public, which was partly a reaction to many of the abuses of the 1980s. "Just because we have a public purpose doesn't mean (we are) a roving commission for the public good," she says. "We have a financial planning purpose. We exist to get people to value financial planning in their lives."
Francis feels that as the results of the self-reviews become clearer, the communications problem will begin to dissipate. "I would like to hope that at the end of 2006 there are fewer people who charge the CFP Board with working surreptitiously toward misguided ends, and that through communications and continued openness there will be a greater understanding of our role," he says.