CFP Board Disciplines Advisors

Fee-only is not subject to interpretation. Advisors are paid hourly or fixed fees for planning advice and services. They are paid asset-based fees for their investment advice and services. They do not receive any form of commission compensation for the sale of investment or insurance products. And, that includes trailing commissions and participation in 12B-1 fees. The CFP Board should require every one of its members to provide investors with a one page document that clearly states how the advisor is compensated, the amount of the compensation, the source of the compensation, and the advice/services investors receive for the compensation. The document should have a statement in bold print: "I do not receive any form of commission compensation from my broker/dealer or third parties for the sale of investment or insurance products.” This document would confirm the advisor is fee-only and eliminate any confusion about definitions or business practices. Investor confusion will continue as long as advisors can select their method of compensation by client: Fee Only, Fee & Commission, Commission Only. Transparency should be a minimum requirement to use the designation. That is how you build trust and credibility with investors. The Board should pay particular attention to advisors who hold active securities licenses. Advisors who are 100% fee-only advisors do not need these licenses.