The CFP Board disciplinary process is supposed to be a private matter. If the offense is severe enough, a public letter of admonition, a suspension or revocation is issued and the public is therefore notified of the seriousness of the offense. For lesser violations, the DEC can enforce private disciplines.
Having been involved with the discipline process in the past, I often remind people that reading about a case is completely different from hearing a case as a panelist. I readily admit there are a lot of things I do not know about the Goldfarb matter.
That said, from what I read, Goldfarb was in violation but the penalty was too harsh. He was going a little fast through a residential neighborhood but was treated like he was speeding through a school zone while texting with an open beer in the cup holder. Moreover, the case was not heard via the usual process. It was heard by a specially convened panel.
Goldfarb is a former chair of the DEC so it is reasonable to think the CFP Board couldn’t identify enough DEC members without a tie to him but the creation of the special panel invites other speculation. The most often repeated theory is that it was done so that it was clear the CFP Board was not giving Mr. Goldfarb any special treatment. How about that one? Do something special to avoid appearing to do something special.
None of that would be at issue if the accusation against him had not become public. Somehow, someway the parties involved got riled up leading to Goldfarb resigning, reportedly under pressure. You would hope the CFP Board wouldn’t pressure their chairperson to resign, making the matter very public until the case was properly heard or unless the extent of the alleged violation was much more severe as is done with an “interim suspension.” But, that is not what happened.
Today, the organization is in court defending its process in a separate matter. The accusers, Jeffrey and Kimberly Camarda, clearly did not like the outcome of their CFP Board disciplinary hearing. Again, from what I read, the CFP Board followed their process in that one. If the dispute proceeds all the way to court, we may see if that is true.
If there is one thing we need the CFP Board to do well, it is to effectively enforce appropriate professional standards for financial planners. I am not as confident about this as I have been and all these new initiatives are partly to blame for my angst.
It isn’t that the public awareness campaign, the Women’s initiative, the academic initiatives and the Career Center aren’t addressing important needs. My issue with them is that they have little to do with the core function of the CFP Board.
Funding for the public awareness campaign has come from additional fees assessed to certificants. I like the campaign generally and I love that it appears to have increased awareness. Upholding the CFP mark as the recognized standard of excellence for competent and ethical personal financial planning is actually part of the organization’s mission statement, so it is easy to see why a campaign would be pursued.
Maybe I am still suffering from a (c)(3) vs. (c)(6) hangover, but after being told for years that the CFP Board cannot engage in things that do not directly benefit the public, the campaign has always made me a bit nervous because it is more of a direct benefit to practitioners than the public. Did the rules change or just the lawyers advising the CFP Board?
I am all for building the body of knowledge, but setting up a Center for Financial Planning and creating yet another academic journal takes a lot of resources. Apparently, it is going to take so much money for the academic initiatives that the CFP Board is now spending time and money on creating a fund-raising campaign to solicit donations. I guess that is better than raising our fees.
We definitely need more women, young people, and diversity in planning. I am in favor of all these things, but I can’t ignore that the one thing the profession needs most from the CFP Board doesn’t seem to be their focus.
The Goldfarb, fee-only and Camarda incidents unfolded almost simultaneously to the CFP Board exploring, developing and rolling out more and more initiatives. Coincidence? I believe it is, but it could also be that the added activity is a distraction and a redirection of resources from the CFP Board’s core purpose and functions.
I do not intend for this column to be taken as an accusation. I have great respect for the staff and Board of Directors at the CFP Board. The CFP Board is a far better place than the dark ages I described earlier, but I think there is enough happening to warrant questions about what the organization is doing. Individually, all these projects and initiatives are noble, but collectively they add up. How much of the certificant fees and the CFP Board’s attention is focused on the most important function of setting and enforcing standards and how much is now being diverted to these other projects?
To keep advancing as a profession, we must have a standards setting and enforcement mechanism that works very well. I hope the CFP Board can keep up the good work and not lose sight of that as they pursue other interests.
Dan Moisand, CFP, has been featured as one of the America’s top independent financial advisors by in many industry publications. He practices in Melbourne, Fla. You can reach him at [email protected].