CFP Board Picks Five Members For Discipline And Ethics Commission

The Certified Financial Planner Board of Standards on Tuesday chose five new members for its Discipline and Ethics Commission (DEC) to replace the five individuals who quit in March to protest changes to the DEC's operations. The new members--all CFP designees--are Daniel Moisand, V. Raymond Ferrara, James Knaus, Yvonne Dean, and Michael Ross.

The DEC is an all-volunteer body of nine board members and four additional volunteers that meets three times a year to hear cases of possible infractions by CFP designees. On March 8, five of the nine DEC members resigned to protest changes to longstanding DEC procedures that were undertaken without their prior knowledge or consent.

In particular, they objected to new procedures that give CFP Board CEO Kevin Keller oversight of the selection and election process of DEC members, as well as the decision to have a CFP Board staffer present when the DEC ratifies its disciplinary decisions.

Previously, DEC chose its own members, who were approved by the CFP Board of Directors. And cases brought before the DEC have been open hearings with a CFP Board staff member presenting the case against the respondent (a CFP licensee or a CFP applicant). The DEC panel--traditionally comprised of CFP licensees--deliberated the case in private before it rendered a verdict.

Disgruntled former DEC members voiced two main concerns about the changes. First, that non-CFP licensees might now serve on the DEC, and they might not be versed enough in the issues surrounding a case to make a sound judgment. Second, and perhaps more important, that allowing a CFP board staff person to participate in the deliberation process would be analogous to letting a prosecuting attorney sit in on jury deliberations, and they worried that the CFP staff person could overturn DEC decisions. In short, they and others in the financial advisory community feared the changes could damage the peer review process, and, potentially, the credibility of the CFP designation itself.

"I take the criticisms from resigning DEC members very seriously because I know many of them and I respect them for the work they do," says Moisand, who was appointed the DEC's chair for the rest of 2008. He's a principal with Spraker, Fitzgerald, Tamayo & Moisand in Melbourne, Fla., and recently completed a five-year term on the Financial Planning Association's board of directors.

"I also know and respect the members of the Board of Directors and I'm willing to give them latitude regarding their actions," says Moisand, adding that he believes he was chosen as chair because he can lend outside perspective to both sides of the issue.

Moisand says the DEC faces two main tasks: to make sure the process during the July hearings works without a hitch; and to help the CFP Board improve the process however possible. "I don't think it's currently broken," he says, "but there is room for improvement."

One area Moisand thinks needs improvement is better communication from the Board of Directors. Indeed, the board was criticized for how it announced the changes to the DEC--the changes were made in January but they didn't tell DEC members until they met on March 8, and then didn't make any public comment about it until four days later when they issued a press release.