Trying To Make Sense Of The Fall Of Mark Spangler; A Lesson In Ethics And Human Fallibility Hot

A year after I started covering the financial advisor business in 1996, Mark became a leader at NAPFA. A raging bull market was under way. The World Wide Web was about to be embraced by the masses.

 

It was during the heady bull-market days of early 1997 leading up to the tech bubble that Spangler was president of NAPFA, and when he hijacked the entire industry’s agenda.

 

Spangler announced that NAPFA had trademarked the term “fee-only.” Practitioners who wanted to call themselves fee-only would have to be licensed by NAPFA, Spangler declared. It was a great story. This tiny band of 350 or so NAPFA renegades attempted to revolutionize the delivery of financial advice. Like so many revolutions, it failed.

 

The Certified Financial Planner Board of Standards, American Institute of Cerfified Public Accountants, Institute of Certified Financial Planners, and International Association for Financial Planning all issued public condemnations of NAPFA.

 

In the May 1997 issue of Dow Jones Investment Advisor (DJIA), I reported that all the major financial planning organizations “demanded that it (NAPFA) relinquish its trademark under threat of lawsuits.” The Interntional Association of Registered Financial Consultants petitioned the U.S. Patent Office to revoke the patent. 

 

Bob Clark, writing in his Editor’s Note on the eve of the 1997 NAPFA national conference, said “The entire industry, it seems, is holding its collective breath, waiting for the pronouncement that NAPFA has announced it will make.”

 

Spangler was the center of attention, a man on a mission to make the world better by advocating for fee-only financial planning.

 

Mark was brilliant. NAPFA’s members forced the industry into a conversation about the ethics of financial planners.

 

The CFP Board, according to an August 1997 story in DJIA, ruled against NAPFA and Spangler. The CFP Board issued a pronouncement saying that an advisor affiliated with a broke/dealer could advertise in the Yellow Pages saying he was “fee-only.” A story I wrote reported:

 

“In finding that the CFP who placed the ad was not in violation of the Code of Ethics and Professional Responsibility, the CFP Board wrote, ‘CFP licensees provide a multitude of services, and the fact that the individual receieves commissions for some services does not impact his or her ability to provide other services for which he or she would be compensated by fees from the client alone.”

 

NAPFA and Spangler soon gave up on the fee-only trademark issue.

 

But it was a moment in financial planning history that I can’t just forget as Spangler faces indictment on 23 counts of defrauding clients.

 

Mark, during a phone call around 1998, told me about a company he was financing that was making batteries that would last longer than any other battery ever before. “It’s my hundred-bagger,” he said. I believed him. He believed it.

 

Within two or three years of Mark’s NAPFA chairmanship, I lost all contact with him. I’d see him once every year or two but he was distant. Now I understand why.

 

Last week’s Spangler indictment coverage shot in just a couple of days to the No. 2 spot Trending on A4A. Readers are drawn to the story if they’re in the business long enough remember the days I am speaking about, and younger advisors are undoubdtedly fascinated about a leader falling from grace.

 

Some will say Spangler was a con man from the start, but I don’t believe that. Spangler had the best of intentions and did not set out to do bad. He was a good man who somehow may have gone wrong.

 

That a man who once led a cause in which so many well-intentioned people believed now stands accused of defrauding clients is, above all, tragic. For his clients, it’s a financial tragedy. For Mark, and those close to him, it’s a human tragedy.

 

Rather than gawk at this unfortunate scene unfolding, it’s perhaps wise to see Mark Spangler’s tragic fall as a reminder that the pursuit of success must be based on good values, not just good intentions. You can’t let money or success get in the way of doing the right thing.

 

Erect a fence around your integrity, and guard it. Do not compromise on integrity ever. It’s never worth it.

 

Don’t lie. When you have bad news for clients, a wise advisor once told me many years ago, be the first to tell them. Not behaving this way can quickly open lead you down a slippery slope.