Where the CFP Board construct is insufficient is accountability.
The disciplinary process is important but it only applies to CFP certificants and the only remedy for bad behavior is loss of the use of the marks. That is a big deal but it isn’t as significant a consumer protection as fining or imprisonment.
I’m not asking that CFP Board be given the power to fine or jail. I am just pointing out that the most publicly recognized body with a meaningful method of assessing financial planning competence, requiring maintenance of that financial planning competence through continuing education, and requiring that financial planning knowledge be put work for clients’ benefit cannot hold practitioners accountable to the extent necessary to provide the remedies the public often needs.
If a certifcant does an incompetent or unethical job as a planner but breaks no rules of a regulator, they may lose their right to use the marks but they can still carry on, legally selling lousy products in substandard ways and the harmed client is still separated from their money.
The groups that can provide stronger remedies regulate product sales and service delivery in just a few of the subject areas within planning and don’t care about the planning itself.
The best solution for the public, and in my mind therefore the best solution for the professionals that serve the public, is separate (not additional) regulation for financial planning.
If that existed in a proper fashion, there would be a place where the public could look for people who have demonstrated competence at advising from a more holistic viewpoint, must continue to demonstrate competence, are required to provide such advice under an appropriate fiduciary standard of care, are required to provide such advice under appropriate standards of practice, and would be penalized in a meaningful way if they failed their clients under such standards.
If this were to happen, we wouldn’t see so many people who own a hodgepodge of whatever could be sold to them. For my entire career, I have seen a steady parade of people that own products sold to them that put them in a weaker financial position yet every sale was technically legal.
Alas, most of what I see now is more ineffective disclosure as the primary method of “protecting” the public. Disclosure is important, of course, but functionally it too often protects the “advisor” not the client. Even a young child knows telling someone you might harm them doesn’t excuse the harm.
There is some hope. The fiduciary horse is clearly out of the barn. The main issue is whether the industry will be able to water it down or render it less effective via a disclosure-based approach. I am encouraged by recent changes around the world and the recent discussions of ending the name game by regulating some titles here in the United States.