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Advisor Organizations Knew of the CFP Board’s Controversial Website Plan. What Was Done About It?

The CFP Board has no memory or record of FPA and NAPFA executives expressing concerns. They beg to differ.

On Tuesday, the CFP Board fiddled while Twitter burned.

In a letter sent the previous day to 86,000 financial advisors, the Certified Financial Planner Board of Standards revealed a change to the organization’s consumer website, letsmakeaplan.org. Investors would no longer be able to search the website for CFP certificates based on how advisors were compensated (although other filters remained, like zip code, company name, the minimum amount required to invest, and the advisors’ expertise).

The change quickly aroused ire that increased as hours passed.

Before noon on Tuesday, the Institute for the Fiduciary Standard, a think tank that advocates for a fiduciary standard for advisors, distributed its own letter, labeling the change a “mistake.”

Knut Rostad, the president of the institute, called for the CFP Board to reverse the decision, arguing the move eliminated objective criteria, made it more difficult for investors to find fee-only advisors held to a fiduciary standard, and was in conflict with investor preferences and prior CFP Board statements.

In the announcement about the website, the CFP Board wrote 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 also updated a list of questions on the website that investors should ask advisors, including “How will I pay for your services?” But some did not think the FAQ made up for the loss.

An hour after the institute’s letter began making the rounds, one of the industry’s most prominent advisors and industry bloggers took to social media to criticize the CFP Board’s decision and publicly question what was behind it.

“An explanation of ‘clarifying how advisors are compensated & which are fee-only is not helpful to consumers’ — when ACTUAL data on consumer behavior suggests very much the opposite — questions abound of ‘what's really going on’ with the CFP Board's change?” Michael Kitces, the co-founder of the XY Planning Network, posted to Twitter, where he has more than 57,000 followers.

Advisors and others started to pile on remarks through Tuesday and news outlets, including RIA Intel, published stories about the backlash.

National Association of Personal Financial Advisors, or NAPFA, an organization that represents approximately 3,800 fee-only financial advisors, put out a statement claiming that by removing the filter “the CFP Board is essentially saying that all compensation models are the same thus doing the public a disservice.”

Come Wednesday morning, conversations on social media intensified and another organization that represents advisors weighed in.

The Financial Planning Association, an organization for CFP certificants with more than 22,000 members, said in a statement the change to the CFP Board’s website was “an unfortunate development that does not support consumers’ ability to navigate the confusing financial landscape.”

“Like CFP Board, FPA is compensation neutral, but we believe the more information consumers can have about a prospective financial planner before engagement, the better position they will be in to select the right planner for them and their respective situations. CFP Board is the certifying body for CFP professionals and an important part of their charge is to protect the public’s interest,” the FPA’s statement said.

Comment threads continued growing on social media through Wednesday afternoon, when the CFP Board broke its silence and defended the change.

The organization “is now, and always has been, compensation and business model neutral. In keeping with this long-held position, and to effectively integrate CFP Board’s revised Code of Ethics and Standards of Conduct — including the expanded application of the fiduciary duty — the Board of Directors re-evaluated its handling of compensation representation information, including on CFP Board’s 'Find a CFP® Professional' search tool on Letsmakeaplan.org.”

The CFP Board does not believe the filter for compensation harmed its neutrality or that removing it eliminated any transparency and potentially harmed investors, Kevin Keller, the CEO of the CFP Board, told RIA Intel. “To the contrary, we believe that this decision supports our compensation neutrality,” Keller said.

The CFP Board has no plans to restore the ability to search by compensation. “I don't see that happening. The board has made the decision. Again, as you think about the continued emergence of financial planning as a profession, we think that it's appropriate to focus on the [fiduciary] commitment not the compensation,” Keller said.

Historic use of the search tool was a factor in the CFP Board’s decision. In 2018, investors used it to search for advisors more than 500,000 times, but only 7% of all searches filtered by type of compensation.

The criticism throughout the week, especially from two advisor organizations who knew about the change more than a year ago, surprised Keller.

Geoffrey Brown, the CEO of NAPFA, and Lauren Schadle, the Executive Director and CEO of FPA, both attended the CFP Board's board of directors meeting in February 2019 when the elimination of the filter was proposed and discussed. Keller does not recall, and minutes from the meeting do not show, that either Brown or Schadle objected to the change.

“There was no dissent expressed until yesterday,” Keller said Wednesday evening.

Keller also has a monthly call with Geoffrey Brown, the CEO of NAPFA, and Lauren Schadle, the Executive Director and CEO of FPA. At the end of July, after the board of directors voted to approve the removal of the tool, there was no pushback during their call. During a separate quarterly call in August with the Financial Planning Coalition, a formal collaboration between the three organizations, the removal was brought up again. No one voiced an objection, Keller said.

Brown refuted the CFP Board’s claim and told RIA Intel he raised concerns during the February meeting. He added that he didn’t argue against the filter’s removal in phone calls because the board had already voted and made a decision. "There are things that we've talked about but might not be implemented for years, if at all,” Brown said.

“The timeline is the timeline, but it’s about what is important to the public and the certificant community.”

Schadle told RIA Intel that she and Evelyn Zohlen, who was president of FPA at the time and now serves as the volunteer chair of the board of directors, attended the February meeting. The CFP Board did not ask the FPA for its opinion about the possibility of removing the compensation filter.

“We were part of a discussion but certainly not part of any deliberations,” Schadle said. The FPA did not raise any concerns about the removal of the filter during calls last summer, according to Schadle. 

There does not seem to be any hostility between the executives, even though their recollections differ.

“We work closely with FPA and NAPFA and we are frequently aligned in our policy positions and in the direction or certainly the desire for financial planning to be seen as a more established profession. There are times where we do things that the organizations may have a different view on. There are times where they take a position that we may differ with, but we have a very close working relationship,” Keller said.

RIA Intel asked Brown and Schadle if they did enough over the past year to prevent the change to the website from occurring. Brown could not be reached but Schadle responded:

“FPA’s position on CFP Board’s compensation disclosure issue is consistent with our response to the Enforcement Task Force report, which we shared with CFP Board and our membership in January. From FPA’s perspective, the Enforcement Task Force report elevated the importance of the CFP Board doing everything it can to ensure that CFP professionals comply with the Standards and help consumers make an informed decision in selecting a CFP professional.”

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