Prominent financial planners criticized the CFP Board at a luncheon this week for its lack of communication, not only when it made changes that led to the resignation of key members on its disciplinary commission but on other matters as well.

   Planners complained that the Board makes too many decisions in secrecy, often without enough input from CFP certificants who will be affected by their actions. The Board's recent changes regarding its Disciplinary and Ethics Commission (DEC) were one case in point, they said.

   The criticism came at a luncheon session Tuesday hosted by CFP Board CEO Kevin Keller, Board of Governors President David Strege and Board member Daniel Candura during the 2008 FPA Retreat.

   Strege told planners that the Board's mission is to "benefit the public" based on its charter as a 501(c)-3 organization. Jay Shein, CEO of Compass Financial Group in Deerfield, Fla., replied that the Florida Bar Association is structured as a 501(c)-6 organization, with a mission to serve its member stakeholders, and that consumers still had confidence in the Bar. Shein went on to complain that no CFP licensees had any knowledge of the DEC changes until after the fact.

   Strege told the crowd that the Board would try to do a better job communicating in the future, but some licensees were not reassured. "Dave, I've known you a long time. I have a lot of respect for you and I believe what you're saying," said Former FPA President Roy Diliberto, chairman and CEO of RTD Financial Advisors in Philadelphia. "But this lack of communication has been going on a long time. I don't think it's going to end; it just keeps happening and happening, and somehow it has to stop."

   Elaine Bedel, a past chair of the CFP Board and president of Bedel Financial Consulting in Indianapolis, pointed out that previously the Board of Governors' meeting minutes were made public immediately following a meeting. That is no longer the case. Barry Kohler, an advisor with BDMP Wealth Management in Portland, Me., noted that in the past, Board meetings were open to the public and the profession; now they're closed.  

   Guy Cumbie, former FPA president, said that in his opinion, the communication issue is a symptom of a larger problem, not the problem itself. Cumbie, founder of Cumbie Advisory Services in Fort Worth, Texas, said that there was something fundamentally wrong institutionally when an organization such as the CFP Board continuously promulgates policies that are at odds with the beliefs of its licensees.

   Cumbie suggested that the CFP Board would be better served if it stopped trying to benefit the public by protecting it from CFP licensees, and instead tried to benefit the public via CFP licensees.

   Kirk Francis, CEO of Cross Financial Services in San Antonio, Texas, said fiduciary standards preclude an advisor from making client decisions in secret and without input. So why, he asked, doesn't the CFP Board follow those principles?

   "I think it's totally insane, and it scares me down to my heart, to have the staff appointing the members of the examination and disciplinary councils. That is the Board of Governors' responsibility, and they have no right to abdicate it," said Harold Evensky, past chair of the CFP Board and president of Evensky & Katz Wealth Management in Coral Gables, Fla.

   The criticism at the luncheon was triggered by the Board's handling of DEC changes. 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 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. On May 20, the Board named five new members.

   Previously, DEC chose its own members, who were approved by the CFP Board of Directors. Cases brought before the DEC had 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.

   In a letter this week to Financial Advisor magazine, Strege said he "wanted to set the record straight" so that any further news coverage reflects the facts. "CFP Board staff members will be present during the ratification meeting and not in the individual case deliberations and rulings. The staff will serve as a resource and to provide consistency, not to steer deliberations. The staff counsel who attends the ratification meeting will not be the same individual who presents cases on behalf of CFP Board before the hearing panels. In others words, staff won't be the judge and jury," Strege said.

   "The ratification meeting occurs following the hearings, which are conducted in private by the Commission's hearing panels. Hearing panels have been and will continue to be comprised of unique combinations of three individuals. Rulings, to be fair to consumers and to certificants, require consistency. Building case law is a desired outcome that is dependent on more uniform interpretations," he added.

   In a follow up meeting yesterday, Strege and Candura said the Board would solicit input from current DEC members on the changes, leaving open the possibility that the Board would reconsider its DEC decision. When it was noted that the only members left on DEC had little or no experience, Strege said he might consult with a larger group of practitioners when changes to DEC procedures are reviewed.