In the wake of controversies involving some advisors use of the term “fee-only,” the CFP Board of Standards has temporarily removed the designation from its Web site, the Board announced on Friday.

The CFP Board maintains a Web site to help consumers locate financial advisors who have earned the CFP designation. Included in the description of the advisors was how they were paid for their services: fee-only or commissions. Advisors could select which applied to them.

By temporarily removing the "fee only" field from all advisor descriptions on its Web site, the board, in effect, is giving advisors a chance to modify how they describe their compensation. If the board finds an advisor has provided inaccurate fee disclosure information once that field is made public again, the board will take enforcement action.

The board says it has received complaints recently about advisors who identified themselves as fee-only, when they actually also accept commissions for selling certain products or have connections to commission-based organizations. When the board receives a complaint it initiates an investigation. If a violation is found, the board can issue a private or public letter of admonition or temporarily or permanently bar the advisor from using the CFP designation.

The most high-profile case involved former CFP Board Chairman Alan Goldfarb, who resigned earlier this year after it was revealed that he held a small equity interest in a small broker-dealer. Goldfarb himself worked in a fee-only firm. The controversy has prompted other advisors who thought they were fee-only to question how the CFP Board would view their compensation status if they own stock in a bank like Bank of America, which in turn owns brokerage giant Merrill Lynch.

Another recent case resulted in a lawsuit being filed in U.S. District Court in Washington by advisors Jeffrey M. and Kimberly K. Camarda, who own an advisory firm and an insurance company. The suit, which is pending, accuses the CFP Board of acting arbitrarily and not taking evidence in their case when the Board of Standards considered it. The CFP Board had said it was planning to issue a public letter of admonition against the two advisors – an action the Camardas contend would harm their firms.

The board has also announced action against at least 28 other advisors in recent months for misuse of the fee-only designation, including Tina Florence, a former member of the board's disciplinary panel. 

Florence, of Lane Florence advisors in Folsom and Cameron Park, Calif., says the board should rescind its action against the advisors and issue a public apology to them, as well as compensating them for any costs incurred in defending themselves.

“This is a huge problem and clearly an admission that they made a mistake,” Florence says of the board's recent action removing the fee-only designation from the Web site. “There is a lot of confusion out there about what fee-only means and they did not seek input from practitioners. We were humiliated and an apology is absolutely required.”

Last week the board sent an e-mail to more than 8,000 CFP professionals who selected the fee-only designation as their method of compensation on the CFP Web sites www.CFP.net and www.LetsMakeaPlan.org informing them the fee-only designation had been stripped from the sites.

The action was taken, according to the board, because it had become aware that advisors were using the fee-only designation but not adhering to a fee-only pay structure or were employed by or affiliated with brokerage firms.

The board notified advisors to review their pay structure and to resubmit a compensation method if they want. If violations come to light in the future, the matter will be referred to the enforcement committee, the e-mail notification says.

Dan Drummond, CFP Board director of public relations, declined to elaborate on the situation or to say whether past sanctions against advisors would be reconsidered.

“CFP Board takes the issue of compensation disclosure seriously, and we are addressing it in a manner that encourages compliance but also protects the public, in accordance with our mission,” says Kevin Keller, CFP Board CEO. “The public has a right to know the type of compensation a CFP professional receives.”