This content is from: Wealth Management

CFP Board’s Latest 'Mistake' Harms Investors, Think Tank Argues

A change to a tool on the CFP Board's website draws scrutiny.

The Certified Financial Planner Board of Standards sent a letter Monday to its designation holders, revealing a change to the website investors can use to search for them. Not everyone welcomed it.

Today, the Institute for the Fiduciary Standard, a think tank that promotes a fiduciary standard for advisors, called the change a “mistake.”

The CFP board operates a website called letsmakeaplan.org intended to help investors find CFP designation holders using a zip code, company name, the minimum amount needed to invest, and the expertise of advisors. Before this week, investors could also search for advisors based on how they were compensated but that function has been removed.

“The three compensation method categories previously provided by the search tool – Commission-Only, Commission and Fee, and Fee-Only – were broad enough to capture the various compensation methods financial planners use today, but not very specific or helpful to consumers. We believe the best way for consumers to select their financial advisor is to have a conversation with their prospective advisor,” the CFP Board said in the letter reviewed by RIA Intel.

To help consumers choose an advisor, the CFP Board also updated a list of questions investors should ask them, including “How will I pay for your services?” But the FAQ doesn’t make up for the loss of the compensation filter, according to the Institute for the Fiduciary Standard.

In his own letter on behalf of the think tank, Knut Rostad, the president of the institute, said removal of the compensation filter is a “doozy” and called for the CFP Board to “admit the mistake” and reverse the decision. It argues the move is an elimination of objective criteria, makes it more difficult for investors to find fee-only advisors held to a fiduciary standard, and in conflict with investor preferences and prior CFP Board statements.

Rostad said the institute has not been in contact with the CFP Board about yesterday’s letter but has communicated with it on other topics in the past.

The CFP Board not could not be reached to comment.

The organization, with nearly 85,000 CFP holders, mandates that designees act as a fiduciary when providing financial advice to clients — meaning any advisor, regardless of how they charge for their services, is supposed to meet the standard the institute advocates for. 

The letsmakeaplan.org website has faced scrutiny in the past. Last summer, the CFP Board assigned a veteran Texas securities regulator to lead a task force to examine and modernize its enforcement practices, after a Wall Street Journal article showed the site includes thousands of financial planners facing criminal or regulatory problems or with customer complaints against them.

Denise Voigt Crawford, the public member of the CFP board of directors chosen to get its enforcement up to speed, recruited a formidable four-person group to help her.

Some changes were made shortly after the Journal’s article published. The CFP Board no longer relies on advisors to self-disclose disciplinary matters or any conduct in violation of its standards. It also began reviewing FINRA’s BrokerCheck, or the Securities and Exchange Commission’s IAPD, when a CFP professional renews their certification.

Along with changes to the letsmakeaplan.org website, the CFP Board also shared details about an advertising campaign this spring. The next “Public Awareness Campaign” is expected to launch in mid-April and feature the website and search tool.

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