CFP Board is the New Sheriff and it Is Not Your Friend
The Problem
CFPs beware! As CFP Board has become “a much more partisan organization that markets itself as a credentialing firm...and moves towards its politicization of personal financial planning” (Forbes 9/17/19), CFP Board is enforcing its rules and publicizing its discipline imposed like never before.
CFP Board’s Sleuthing
CFP Board is the new sheriff in town and it is not your friend. CFP Board proactively seeks out disciplinary inquiries by searching FINRA databases, state securities websites, and SEC releases. CFP Board also studies the 16 self-disclosure obligations with which CFPs are required to comply.
Then, CFP Board contacts you for further “information”.
CFP Board’s Bait and Switch
So many of our CFP clients have fallen prey to the “friendly” inquiries of the CFP Board, only to then be shocked to receive a CFP Board complaint seeking discipline, including a revocation of the CFP mark.
CFP Board’s Investigation – What CFPs Need to Know
The CFP Board has the authority to conduct an investigation of a CFP professional. Pursuant to the CFP Board Procedural Rules, CFP professionals are required to cooperate with such an investigation. The investigation can include written and/or oral requests for information.
However, a CFP professional that is the subject of a CFP Board inquiry /investigation may be represented by an attorney, and it is critical that a CFP professional have such representation.
The reason is simple. During an investigation, the CFP Board is looking for evidence of misconduct by that CFP professional, and they are not looking out for the CFP professional’s best interests.
The results of a CFP Board investigation can have serious ramifications for a CFP professional. The investigation findings often lead to an enforcement action against the CFP professional.
It is not uncommon for a CFP Board Complaint to cite to what the CFP professional said during the investigation as evidence of a violation. CFPs think they are helping themselves, but they actually are signing their CFP certification “death warrant”.
Consequences of a “Public” Sanction
Only one form of discipline (the Private Censure) is not made public (and that gentle penalty is inconsistent with CFP’s new mission to show the country how tough it is in order to lobby for the privilege of being the sole credentialing agency for all financial planners).
So, six times a year, the Wall of Shame is updated. CFP Board issues a detailed press release listing all of the “bad actors” and their “sins”. Additionally, that disciplinary information permanently is included in the CFP Board’s searchable database on its public website.
Worse still, plaintiffs’ lawyers monitor both the press releases and the CFP Board’s website in order to search for new financial advisors to sue. The lawyers’ Internet posts solicit investors for contingency fee lawsuits nationwide and ask, “Have you lost money with [insert CFP’s name]? If so, contact us.”
In a cascading effect, the solicitations lead to arbitration claims, which lead to more regulatory inquiries/actions, which lead to more CFP inquiries/complaints, and possible employment terminations. All that easily can turn into a business and reputation “death spiral”.
Recommendation
When you receive an initial CFP Board inquiry, your first call should be to your lawyer, not the CFP Board!
Questions? Contact us at 312-332-0000 or visit EcclestonLaw.com.
Various state ethics rules require us to label this material as an Advertisement or as Advertising Material. If you have retained a lawyer, please disregard this letter. We retained your name through publicly available records.