Questions and rumors fly as the CFP Board continues to remake itself.
After a year's worth of changes that has seen it's
staff cut by 60% and many of its core operations put under intense
scrutiny, it's safe to say the Certified Financial Planner Board of
Standards is in the midst of remaking itself.
But what's far from clear is just what the new CFP
Board will look like when everything is said and done. All the
unknowns, in fact, have created their own problems for the board.
Earlier this year, the CFP Board found itself in the
position of having to counter a wave of speculation and rumor that
included whispers about the board possibly declaring bankruptcy,
eliminating or shrinking its registered education program and moving
its headquarters from Denver to Washington, D.C.
In an e-mail this past summer, CFP Board Chair-elect
Barton Francis, of Pricewater-houseCoopers LLP in McLean, Va.,
rebuffed these and other rumors, blaming the mess on a communications
failure between the board and its constituents. "I am confident
that we will cure our communication problems and have you comfortable
with our progress by the middle of next year," he said.
Observers say communications have improved somewhat
since then, but as the CFP Board continues its re-evaluation process,
speculation and the feeling of uncertainty continue. This is most
evident in the area of education-an area of operations that the CFP
Board has said will be under a top-to-bottom review in 2006.
These operations include the CFP Board's role as
overseer of more than 300 CFP Board-registered education programs at
200 higher education institutions, which fulfill the education
requirements of those wishing to hold the CFP mark. It also encompasses
the certification exam given to those seeking CFP credentials.
The board's review of its education-related
operations appears to be open-ended, with CFP Board CEO Sarah Ball
Teslik saying it could lead to a continuation of the status quo, a
reduction or an expansion of the board's role. An education task force
was appointed at a recent board meeting, she says.
"We're going to get a lot of interesting minds in
the same room to say, 'If we were creating educational operations
today, what would they look like?'" Teslik says, adding there are
significant limits on how much "we can specify what educational
programs can do. We can't run them ourselves."
But it's the open-ended nature of the review that
has some CFP education program directors worried. Somnath Basu,
director of the CFP-registered finance curriculum at California
Lutheran University in Thousand Oaks, Calif., says that although
communications with the CFP Board have improved, some worries persist.
Among the concerns is how the deep layoffs in CFP
Board staffing since last December have impacted the education
programs. Staffers who resigned as part of the downsizing included the
CFP Board's director of academic programs, the head of exams and the
staffer who assisted program directors with marketing.
"That is directly related to education," Basu says
of the reduced CFP Board staffing. "All of these people we have been
dealing with all these years have lost their jobs or resigned, and we
really don't know any more who we need to go to when we have questions."
Another CFP Board initiative that is being watched closely is the
board's review of its ethics code and practice standards, and the
possible merger of portions of both documents that are deemed to be
redundant. Underlying the review is the concern that there is too much
overlap between the ethics code and the practice standards, which are
supposed to be two distinct documents, each with a different
purpose, CFP Board officials say.
"The general thinking is the code of ethics should
be aspirational and the practice standards should be enforceable,"
Francis says. "But there are elements of each in each document."
Teslik says most of the work will consist of
reorganizing rules and codes that are already on the books, but there
will be some substantive changes.
One such change will address a loophole that allows
CFP certificants to avoid the application of the board's practice
standards on their business by stating that they are not practicing
personal financial planning. The board's rules state that the standards
are only applicable to those practicing personal financial planning.
"Increasingly, they are stating that they are not
practicing personal financial planning," Teslik says. "We found
ourselves in a situation where the board could not apply our practice
standards to most of our certificants."
There is another reason the CFP Board's internal
changes have created a stir: They are happening after the CFP spent
years operating under the status quo. Some veteran education program
directors, for instance, say this is the first time they ever recall
the CFP Board reviewing its education operations.
Francis says the self-scrutiny that's going on at
the CFP Board shouldn't be considered big news. It should be considered
business as usual, he says.
"In order for the board to fulfill its
responsibilities, it needs to have a clearer long-term vision,"
he says of the program reviews. "We think it needs to be done and is
part of our job."
Francis undoubtedly is right. But the CFP Board has
a long history dating back more than a decade of surprising licensees
with new initiatives, ranging from the initial adoption of
practice standards to its proposal to launch a new Associate CFP
designation, which was soon dubbed "CFP lite" and subsequently aborted.
During the 1990s, the organization was headed by
Robert Goss, an attorney with extensive experience in regulatory
affairs who created many subsidiary boards as part of the CFP Board
and, as much as anyone, helped put the CFP mark on the map. Goss
understood that if the CFP Board was ever to earn credibility among
financial regulators in the nation's capital it would have to create a
certain amount of tension between the organization and its
licensees.
But Goss had one serious flaw: his
penchant for secretive dealings behind closed doors. When the CFP Board
sprung its Associate CFP proposal on mark-holders in 1999, the outrage
was overwhelming and he left the post a year later.
So in some ways the changes that have shaken the CFP
Board ever since Teslik was hired as CEO of the organization in
September 2004 are just par for the course. Everyone who has met Teslik
comments on her intelligence, though some worry about her
listening skills. Those fears are based as much in the
organization's long history of failing to listen to licensees as they
are to brief interactions with Teslik. Formerly the executive director
of the Council of Institutional Investors-where she gained the
reputation of being a tough, no-nonsense administrator and a skilled
lobbyist-Teslik was hired after an executive search that took slightly
more than a year. Her immediate predecessor, Lou Garday, was former
executive of Burnham Pacific, a real estate investment trust, who
resigned abruptly in the spring of 2003 after an ineffectual two-year
tenure in which he was frustrated by the board's interpretation of its
mission and its status as a 501 c (3) nonprofit organization.
Teslik wasted little time getting down to the job of
reshaping the CFP Board. Just a little more than a month after starting
her job on November 1, she lopped a third of the organization's staff
off the payroll.
Her actions confirmed the views of many former board
members that the staff was bloated, though Teslik avoids saying it
outright and has declared the notion is unfair to former employees. Her
first round of cuts targeted the board's information technology and
external communications departments, which she says were rife with
redundancies and duties that could be outsourced more cheaply. She
cited as one example of wasteful spending the hiring of three people to
read newspapers to search for trademark violations and stories about
the CFP Board. Some believe that former employees may have been the
source of bankruptcy and other rumors.
In conjunction with the layoffs, she also embarked
on a plan to put many of the CFP Board's data and services on the
Web-an effort that is still underway. In August, another round of staff
cuts reduced the CFP Board's staff to 30. The staff numbered 78 when
she was hired.
"There are not any more layoffs planned at this
point," she says. Although it's operating with a reduced staff, Teslik
says the CFP Board's operations are more efficient.
"It's an office where everyone here is 90% or better
of what I consider a star employee to be," she says. "The idea is to
identify stars, keep stars, then try to have an environment where they
will want to stay for their entire career."
The layoffs, however, have played a large part in
the rumor and speculation that has been dogging the CFP Board this
year. Among the whispers were that the reductions were to stave off a
financial crisis, and that the shrunken staff would be moved to
Washington, D.C.-two rumors that Francis flatly denies.
But the communications problems, which predate the
tenures of Teslik and Francis, continue to fester-and not just with
licensees. Education program directors, meanwhile, state that they were
never informed of the layoffs that impacted their operations, and still
haven't been clearly told if the personnel will be replaced or not.
"We were not told they were gone" by the CFP Board,
one director says privately. "These people, because they knew some of
us, told us they were going."
Teslik acknowledges that the reductions in education
program staffing have caused worry and speculation among program
directors, and she could not say when or if any of the personnel would
be replaced. Education staffing, she said, will be dependent on the
recommendations of the education task force that are expected next year.
The CFP Board has enough education staff left to
continue the status quo, which she considers to be minimal to begin
with. She notes that the CFP Board is not an accrediting body and has
never conducted site visits of its affiliated programs. "Our current
involvement is actually very limited," she says. "We are continuing to
perform the functions we performed when we got here."
As for the CFP Board budget, Teslik says it is in
the black for the first time in two years. "We're not living on
borrowed money," she says. "When I got here, we had no reserves."
She says the board is also trying to improve its
communications with its members, education program directors and the
public. The board will be holding an annual meeting, she says, that
will be similar to a corporate shareholders meeting, as well as
increasing the frequency of its online newsletter. Additionally,
most of its board meetings are now open to the public, which is rare
among similar organizations.
For a newcomer to this profession, Teslik also
understands some of the long-simmering tension arising from the board's
goal of protecting the public, which was partly a reaction to many of
the abuses of the 1980s. "Just because we have a public purpose doesn't
mean (we are) a roving commission for the public good," she says. "We
have a financial planning purpose. We exist to get people to value
financial planning in their lives."
Francis feels that as the results of the
self-reviews become clearer, the communications problem will begin to
dissipate. "I would like to hope that at the end of 2006 there are
fewer people who charge the CFP Board with working surreptitiously
toward misguided ends, and that through communications and continued
openness there will be a greater understanding of our role," he says.