Alan Goldfarb, a former chairman of the Certified Board of Standards Inc., says he is disappointed a federal judge threw out a lawsuit against the CFP Board over its policies regarding the use of the "fee-only" designation without a full hearing.
Goldfarb was one of many advisors caught up in the controversy over which advisors can call themselves fee-only, which some advisors view as a more favorable way to earn money than the collection of commissions.
When Goldfarb was sited by the board for calling himself fee-only, he resigned his chairmanship in protest. The board said he could not be called fee-only because he owned 1 percent of his firm’s broker-dealer, which accepts commissions, even though all of Goldfarb’s clients paid him through fees for service.
A Florida couple, Jeffrey and Kimberly Camarda, filed suit against the board over the same issue, but a federal judge threw out the suit on Monday. The opinion is sealed for 14 days, after which it may be made public.
“There is an unfairness and an inconsistency in what the board did,” says Goldfarb, “and it is unfortunate there will not be an open hearing on how they are” punishing CFP certificate holders.
If there is no recourse in the courts, then no one is representing the certificate holders, he added.
The CFP Board of Standards is not a membership organization, but issues CFP designations to those financial planners who pass its examination process. Certificate holders pay a fee to hold the designation.
“Eighty percent of their money is going to an advertising campaign run by the CFP Board to tell the public they need to hire CFPs for their financial planning,” Goldfarb says. “But if a CFP designee disagrees with something the board does, there is no recourse.”
Goldfarb also took issue with action the board took in allowing CFP holders who worked for wirehouses to change their designations on the CFP website from fee-only to commission without repercussions from the board.
Marilyn Mohrman-Gillis, managing director of public policy and communications for the CFP Board, said on Tuesday, “CFP Board is very pleased that Judge Leon dismissed the case on the basis of deficient legal claims without the need for a trial. This ruling affirms CFP Board's authority to set and enforce its standards of professional conduct, which serve as critical consumer protections.”