Evan Simonoff’s April 3 blog about the Certified Financial Planner Board of Standards [“Global Junkets Lavished on Directors Fuel CFP Board High Life”] involved broad and unsubstantiated accusations about the operations and ethical stewardship of the organization. The article blurred the line between news reporting and an editorial opinion piece – with numerous unnamed sources and erroneous facts – and was willfully biased and inaccurate.
The blog’s string of random, disconnected and inflammatory charges seems to reflect old grudges against the CFP Board of a long ago past, while creating an impression that the CFP Board of the present is not properly managing certification revenues and that the current Board of Directors is failing to exercise its fiduciary obligation to oversee the organization. Let me assure you, as the Chair of the Board: nothing could be further from the truth.
The CFP Board of today is not your grandfather’s CFP Board. As the profession has evolved, so have we, and we have never been more active and effective. In the last seven years, under the leadership of the Board of Directors and CEO Kevin Keller, we have realized significant achievements in advancing our critical mission – to benefit the public by granting and upholding the CFP® certification – and promoting the financial planning profession in general.
Through CFP Board’s work in partnership with nearly 70,000 CFP® professionals and other organizations and thought leaders invested in the future of the financial planning profession, the CFP® certification has become the recognized standard of excellence for financial planning, both within the profession and among the public. CFP Board is executing on a bold and aggressive strategic plan, developed and approved by the Board of Directors almost two years ago, aimed at increasing awareness of CFP® certification; growing the number of CFP® professionals; advancing the long-term goals of recognition and regulation of financial planners; and establishing an academic body of knowledge for the profession. Let’s look at just a few highlights from CFP Board’s many recent accomplishments.
• Today, we have over 69,500 CFP® professionals in the United States. CFP Board has added nearly 15,000 CFP® professionals since Mr. Keller arrived in 2007, which is a 27 percent increase. CFP Board achieved this growth in the face of a shrinking number of financial advisors in the industry overall and during a significant economic recession, while strengthening its ethical standards (with the adoption of a fiduciary standard) and its academic standards (with the adoption of college degree and capstone course requirements). Further, CFP Board is executing on numerous strategies to continue to grow the number of CFP® professionals. These include working with FPA and NAPFA in support of their requirement of CFP® certification for future membership, working with 221 colleges and universities to encourage their students to become CFP® professionals, and reaching out to firms to encourage policies in support of CFP® certification. (Ten of the largest firms grew their CFP® professionals by an average of almost 10 percent last year, and three major firms have announced the incorporation of CFP® certification-centered education in their new advisor training programs.) CFP Board is also committed to increasing the number of women CFP® professionals and will be releasing groundbreaking research and recommendations with a white paper from its Women’s Initiative in a few weeks.
• CFP Board initiated a Public Awareness Campaign in 2011 – in direct response to requests from CFP® professionals – to increase consumer awareness of CFP®
certification and the value of working with a CFP® professional. Ninety-four percent of CFP® professionals said they believed such a campaign was needed. The campaign, which is funded by an annual fee dedicated solely to the direct expenses of the campaign with no allocation to overhead or operational expenses, has been very successful: it achieved its four-year objective goal for increased consumer awareness in only two years. In 2013, the Board approved its ongoing continuation, and CFP® professionals continue to overwhelmingly support the campaign.
• CFP Board has earned a seat at the public policy table. In collaboration with our Financial Planning Coalition partners, FPA and NAPFA, we have tirelessly advocated in support of a fiduciary standard, and CFP Board led a game-changing study conducted by the Boston Consulting Group that was a significant factor in defeating legislation that would have paved the way for a FINRA SRO for investment advisors.
• CFP Board has made great strides in advancing the academic body of knowledge for the financial planning profession. In the last four years, we have increased CFP Board-Registered Programs by 10 percent, with a 33 percent increase in baccalaureate programs. CFP Board recently announced the first Ph.D. program specializing in financial planning offered in a college of business administration, which will be added to the four outstanding Ph.D. programs already in place, and we have 54 new programs in development.
• In 2013, CFP Board released the Financial Planning Competency Handbook, the first authoritative and seminal work combining academic theory with the practice of financial planning, and we are collaborating with John Wiley & Sons on a peer-reviewed academic journal to provide an academic platform for faculty who are teaching and conducting research in financial planning.
• CFP Board has significantly improved its enforcement policies and practices – all with the goal of being fair to participants and credible to the public. Recent reforms – including Anonymous Case Histories, Sanction Guidelines, and the addition of public members on the Disciplinary and Ethics Commission (DEC) – facilitate consistent, transparent and credible decisions, in line with our Standards of Professional Conduct. Our Professional Standards team is intently focused on facilitating compliance with our Standards through the development of educational tools (webinars, notices, guides, and published FAQs) and the establishment of a Business Model Council to facilitate application of our Standards to the wide range of business models used by our CFP® professionals.
CFP Board has realized these accomplishments with 20 percent fewer FTE staff (62 today) than employed by the organization ten years ago (75 then). A survey of CFP® professionals (which reflects a statistically significant sample of CFP® professionals versus a few unnamed sources in Mr. Simonoff’s article) reveals that they recognize CFP Board’s recent accomplishments to advance the certification and profession:
• 91 percent say they are very satisfied with their career choice in financial planning – a six point increase from the 2011 survey;
• 92 percent say they are very satisfied with their decision to pursue CFP® certification; and
• nearly two-thirds (63 percent) of CFP® professionals report that the service they receive from CFP Board meets their expectations – a dramatic increase from 2011, when that number was 48 percent.
Although I appreciate Mr. Simonoff’s kind words for me and fellow board member, Joe Votava, articles such as this one – abounding in factual inaccuracies, loose interpretation of facts, anonymous quotes and unfounded speculation – do a disservice to the many dedicated leaders who have served and continue to serve the financial planning profession through CFP Board, including my other colleagues on the Board of Directors and Mr. Keller. I feel compelled to specifically address a few of the most egregious accusations.
Veiled suggestions that Mr. Keller has engaged in any conflicts of interest are patently wrong and offensive. The Board has complete confidence in Mr. Keller’s leadership. His salary is determined by the Board of Directors’ CEO Oversight Committee after a careful process that includes consideration of a report by an external compensation consultant that benchmarks executive compensation for similarly situated non-profit financial services organizations. The fact that Mr. Keller’s salary has increased since 2009 (which is incorrectly reported by Mr. Simonoff) solely reflects the successful execution of Board-established CEO goals and marketplace benchmarks.
Mr. Simonoff also irresponsibly mischaracterized CFP Board’s limited and appropriate work with the Financial Planning Standards Board (FPSB), which owns the CFP mark outside of the United States. As the largest member of FPSB (45 percent of all CFP certificants worldwide are in the U.S.), two to three top leaders of CFP Board attend two annual FPSB meetings per year (the remainder of the work is done by teleconference) to help other countries grow to create a worldwide profession, as well as protect the potential reputational harm to the CFP brand and to preserve our most important asset: ownership of the CFP marks in the U.S. All travel, whether international or within the U.S., is consistent with corporate travel policies that ensure costs are appropriate and reasonable.
But most offensive are Mr. Simonoff’s misguided and inflammatory charges that the Board of Directors is not fulfilling its oversight obligations. Our organization has rigorous governance policies and procedures in place, including review and oversight of the budget and CEO salary. The Board is vigilant in exercising its fiduciary obligation to ensure that CFP Board’s policies, procedures, operations and expenditures are aligned with Board priorities, are consistent with best practices for a non-profit organization, and are singularly aimed at CFP Board delivering on its mission.
CFP Board is committed to transparency and effective communication with CFP® professionals, others in the financial planning profession and the public. We are proud of our outstanding work, and remain devoted to furthering our mission. The strength of the CFP® certification is a direct result of CFP Board’s resolution to ensure that the requirements remain thorough and relevant, as well as the dedication of our CFP® professionals to abide by CFP Board’s high standards. CFP Board will continue to pursue those efforts that are in the best interest of both the financial planning profession and the public – today and for years to come.
Ray Ferrara is chairman of the CFP Board.