There’s a huge controversy brewing in the world of fee-only planners, in the wake of the CFP Board’s decision to reset compensation models for all planners on their website to “none provided.” An email sent to all CFP holders last week directed designees to reread the policy about fee-only standards and then select the appropriate compensation model.
The controversy started when a former chairman of CFP was publicly sanctioned for alleged abuses of the CFP’s compensation rules while two former board members were privately sanctioned. Threats by two financial planners to sue the CFP Board prompted the private sanctions; reports by Financial Planning magazine that almost 500 wire-house, insurance and bank advisors were listed as fee-only may have prompted last week’s mass email about resetting compensation models.
While some criticize the CFP Board for singling out a few high-profile planners, others think the recent move to reset everyone’s compensation model was wise since it did not target a few violators. The whole controversy brings into question whether the CFP has the resources, or even the will, to police their policy of who is really a fee-only planner. This could undermine one of the benefits the CFP provides to designation holders.
Meanwhile, in an unrelated move, the SEC is moving ahead to create a uniform fiduciary standard — which, as proposed, could create dual fiduciary compensation models.
