Conceding that it could have managed the compensation component of its online search tool more effectively, the CFP Board of Standards is revising the way it will allow CFP licensees to characterize their compensation methods. Among other measures, the CFP Board will also give financial services firms and their compliance departments the ability to prevent their representatives from claiming they are fee-only, among other things.

In an interview, CFP Board chairman Ray Ferrara said the organization would start using the available public data to monitor and detect any inconsistencies in how CFP certificants present themselves to the public.  it will also seek input from certificants.

Both Ferrara and CFP Board CEO Kevin Keller argued that as business models in the advisor universe have evolved, the challenge facing them has become more complicated. “Certificants have to provide [the public with] an accurate description of how they’ll be compensated,” Keller said.

Ferrara expressed some frustration over the fact that the board how allowed itself to get sidetracked over the age-old compensation debate within the profession. “If I could wave a magic wand, I’d change the ‘F’ word from fee-only to fiduciary,” said Ferrara, whose firm Pro-Vise is a fee-and-commission firm in Tampa, Fla. For the last seven years, the CFP Board has required all certificants to adhere to a fiduciary standard of conduct regardless of their method compensation.

Nonetheless, by attempting to regulate compensation disclosure in a clumsy manner, the board angered many licensees, distracting the group from its efforts to pursue its new agenda. With a projected intake of $28.5 million this year, the board has talked about using its growing revenues to create a new journal with John Wiley & Sons and engage in other new ventures. As a 501 (c)3 non-profit, the CFP Board must spend licensee dues, and they are growing. The number of certificants should soon cross the 70,000 mark. It recently crossed the 69,500 line. 

Two events in 2013 sparked the controversy over compensation disclosure. After discovering that CFP Board chair Alan Goldfarb, who worked on a fee-only basis at Weaver Wealth Management, owned a 1 percent interest in the firm’s broker-dealer, the board subjected Goldfarb to its disciplinary process. In November 2012, he resigned as CFP Board chair. In 2013, the CFP Board issued Goldfarb a letter of admonition.

Many advisors felt Goldfarb, who had devoted hundreds of hours to the CFP Board as a volunteer over the past decade, got treated in a shabby fashion. Ferrara’s response was that the vast majority of critics and others, himself included. didn’t sit in on the hearings and don’t know all the facts.

It is significant, in Ferrara’s view, that Goldfarb could have appealed the finding and chose not to do so. “Alan is a friend,” he said. "It was unfortunate."

He adds that Goldfarb may well have been held to a higher standard simply because he was CFP Board chair. Most observers believe that if Goldfarb had been an ordinary CFP certificant, the whole issue would never have surfaced.

The problems didn’t end there. After receiving a complaint that Jeffrey and Kimberly Camarda, who own an interest in an investment management firm and an insurance agency that sells insurance on a commission basis, were calling themselves “fee-only,” the CFP Board brought a complaint against the Camardas before its Disciplinary and Ethics Commission (DEC).

The DEC found in a unanimous decision that the Camardas were in violation of its rules; the Camardas appealed the finding. A five-member appeals committee unanimously agreed with the initial finding. The Camardas then filed a lawsuit against the CFP Board.

The larger issue, Ferrara said, is about “our right to protect the public and to set our own rules. We vigorously defend our right to set our own rules.” The CFP mark and the board itself “would never have become what they are if we hadn’t [done so in the past].”