“To ‘Fee,’ or not to ‘Fee:” Existential Angst and the CFP Board’s latest misstep.

On rare occasion, I will go off script. I have avoided commenting on the “fee-only” controversy. However, the cacophony has reached such clamor I feel the need to opine.

I selected my homage to Shakespeare’s play, Hamlet because it is most appropriate to the matter at hand. In his soliloquy Hamlet questions the meaning of life, and whether or not it is worthwhile to continue his existence when life contains so many hardships. His conclusion is that the main reason individuals choose to live is that they fear death and the uncertainty, which lies beyond life.

The Certified Financial Planner Board of Standards Inc. is in the midst of such existential angst. Financial Planning, a trade journal for financial advisers reported that the CFP board had allowed 486 CFP® certificants from the four major broker-dealers to hold themselves out as fee-only advisers on its website—in open violation of the board’s own rules for use of the term. This event was preceded by two significant fee-only issues: the Camarda suit and the Goldfarb resignation.

Alan Goldfarb, the former chairman of the Board of Directors of the Certified Financial Planner Board of Standards, Inc. resigned in 2012. Investment News reported that a CFP Board disciplinary panel issued a letter of admonition to him in June of 2013 in which it asserted that Mr. Goldfarb misrepresented his compensation as ‘fee-only.’

Mr. Goldfarb disputed the claim but chose not to appeal. This is the not the case with the Camarda suit. Jeffrey Camarda and his wife, Kimberly Camarda disputed the board’s assertion that they misrepresented their compensation as ‘fee-only.’ They are asking a federal court to block the CFP Board from giving them a public admonishment.

Is ‘fee-only’ much ado about nothing, or is it something much deeper with which the CFP Board is grappling? I feel that it is much deeper. As a result of the CFP Board’s stringent requirements to attain the CFP® certification (Ethics, Education, Experience, Exam) the mark became the gold standard for the consuming public and for financial planners. In the late 1990s and the early 2000s the CFP® certification became a ‘de facto’ fiduciary standard in the minds of many. All of this is only natural considering the boards stated objective of “serv[ing] the public interest by promoting the value of professional, competent and ethical financial planning services, as represented by those who have attained CFP® certification.”

Today, in the minds of the consuming public ‘fee-only’ has become the new gold standard for a financial adviser. Frankly, we receive daily inquires for our services and not one request has asked if an adviser is a CFP® or not, their question is always, are you ‘fee-only.’ The board’s angst is the result of the fact that the tide has now changed.  The consuming public—and Congress—has a much clearer picture of the role of a financial fiduciary. And though a little out of focus, it looks a great deal like ‘fee-only.’

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