Allan Roth, a CFP and blogger for The Wall Street Journal, refutes the CFP Board's claims about when it was obliged to enforce the fiduciary standard and says the CFP Board's offer to put him on a committee to review disciplinary actions against CFPs came with strings attached.
Two weeks ago, Roth, a CFP practitioner from Colorado, Springs, Col., publicly chastised the CFP Board in his WSJ blog for not enforcing the fiduciary standard. He cited an incident in which he alleged that a CFP professional "double-dipped" by charging a client 5.29% in commissions and advice fees annually on assets in a variable annuity and says he and the client filed complaints with the CFP Board against the other advisor for not doing what was in the client's best interest. Roth accused the CFP Board of giving little more than lip service in requiring CFPs to act in their clients’ best interests.
I posted about Roth's allegations because his effort could help clarify the CFP Board's position on the fiduciary standard.
The CFP Board responded earlier this week by sending me a statement by its CEO Kevin Keller saying that Roth's allegations covered actions by the accused advisor before the CFP Board began enforcing a fiduciary standard on CFP licensees.
On Tuesday evening, just as the Jewish holiday of Yom Kippur started, Roth sent me this response below. Because of the holiday, I was delayed in publishing it until now.
Thank you for the response, Mr. Keller.
In actuality, my complaint noted the conduct continued into 2008. The CFP Board had been using the word "fiduciary" before July 1, 2008 and saying that the client comes first since before 2008. The CFP Board has been preaching "client first" for a long time.
For example, on May 9, 2008, you sent an email to the Mole (my pen name) at Money Magazine stating, “We at CFP Board preach Ethics every day. An element of becoming a CERTIFIED FINANCIAL PLANNER™ involves agreeing to abide by our code of ethics.”
I stated in my Wall Street Journal blog post that the CFP Board lost my complaint but did not mention the CFP Board did not have a single question about my complaint. Regarding writing about the Disciplinary and Ethics Commission process, the CFP Board turned down my proposal to have the CFP Board review and even approve the facts being disclosed in my article, but not my opinions on the process. That would have assured, as you put it, “no confidential case information was included.”
I agree with the 88% of CFP professionals you mention who think that financial professionals should be held to a fiduciary standard. I just think this should be enforced. I am beginning to analyze some recent data on CFP Board enforcement to see whether CFP professionals are held to a higher standard than non CFP professionals.
As a CFP professional, I share your goal of working in the best interests of the client. In my opinion, however, we need to recognize conflicts of interests in our profession and provide standards on dealing with these conflicts. For example, when is a fee too high or what is considered fair disclosure? I would like to see the CFP Board come out with positions on these and many other important issues.
I also agree with the Board’s mission to benefit the public and have some ideas of how better achieving this mission can be accomplished. I hope we can meet to discuss them in person in the near future.