My belief is that most posts should be no longer than a one
screenful, or two at the most. But after an initial flurry of
interest and concern, the blogosphere has been unbelievably quiet
about the array of decisions made by CFP Board. Actions by the Board
have opened the door to the real possibility that political and
financial influences will undermine the integrity of the marks. This
long post (apologies in advance) will hopefully promote discussion
about issues important to our profession.

Several thought-leaders of the profession have attempted “back-
channel” negotiations with various Directors and/or the CEO of CFP
Board. At the same time, various Directors have reached out to
respected certificants in an attempt to see if some resolution might
be possible. There have been, to my knowledge, at least four
separate such attempts to head off public debate.

We should always be open to discussions. However, it is a mistake
for certificants to refrain from acting in the hopes that one of
these back-channel efforts will produce real reform. What CFP Board
least desires is any public debate that might reveal divisions
between the Board and certificants.

Strategies by the Board of “divide and conquer” and engaging in
endless negotiations fit perfectly with the goal of taking no
action, letting time pass, and hoping the whole controversy blows
over. By contrast, what certificants most need to bring real change-—
or at least a DISCUSSION about real change—-is vigorous public
debate. Otherwise, it justifies the CFP Board in continuing to
ignore these issues and assume that those interested in discussing
them are limited to Marty, me, and the four other “Quitters” as CFP
Board has intimated.  [Disclosure: I was one of the Commissioners
who felt compelled to resign.]

The actions taken by CFP Board resulting in the March 8, 2008 mass
resignation by a majority of the members of the Disciplinary and
Ethics Commission (DEC) are fully set forth in the White Paper,
which is posted on this website and is available elsewhere.

The White Paper details the reasons mass resignation seemed the only
alternative, and also provides the background and a recounting of
the events leading to this protest by a group of very concerned and
very committed certificants. I hope everyone takes the time to read
the White Paper.

The January Resolution of CFP Board [see the White Paper]
transferred oversight of the certificant disciplinary process from
certificants (the Board) to the CEO and his staff (none of whom were
ever practitioners). But the actions affecting the DEC were merely
the flashpoint. The issues have now morphed from those focused only
on the disciplinary process to wider concerns shared by a larger
group of certificants about governance and decision-making at CFP
Board.

The real issues are how can an organization whose $15 million annual
budget  comes almost entirely from certificants ignore those same
certificants when making major decisions? There was no meaningful
discussion with certificants about the following decisions:

• Moving the organization’s headquarters from Denver to
Washington, D.C.
• Terminating the tradition of the Chair of the Council on
Examinations attending Board meetings.
• Terminating the tradition of the Chair of the DEC attending
Board meetings.
• Closing the entire Board meeting to the public.
• Closing the entire Board meeting to certificants.
• Ceasing to publish Minutes of Meetings of the Board of
Directors
• Adoption of a Code of Professional Responsibility with
a “watered down” fiduciary standard.
• Transferring oversight of the examination process from
certificants (the Board) to the CEO and his staff (none of whom were
ever financial planning educators or practitioners).
• Finally, as noted above, transferring oversight of the
certificant disciplinary process from certificants (the Board) to
the CEO and his staff (none of whom were ever practitioners), and
authorizing actions including:
   o The CEO selecting the members of the DEC
   o The CEO selecting the volunteers who serve on hearing panels
   o The CEO deciding who will serve as the officers of the DEC
   o The CEO having his attorney present during deliberations

Each of these decisions has grave potential to adversely impact our
profession and to open the marks to the basest kind of political and
financial influences. The refusal of the CFP Board to engage in
meaningful discussion PRIOR to making these decisions is dismissive
and insulting to the practitioners whose money funds the
organization. Even the suggestion from the DEC that the resignations
could be avoided if the CFP Board merely suspended implementation
pending discussion of the January Resolution was summarily dismissed
by the Board without any real consideration.

DISCUSSION AFTER THE FACT IS NOT ACCEPTABLE. Each of the decisions
bulleted above should be reexamined, debated publicly, and a
decision informed by input from the most critical stakeholders-—the
certificants-—considered. It is not too late to undo each and every
one of these decisions if that is what the majority of certificants
wishes.

Unless the CFP Board takes meaningful action, it is time for action.
The strategy of endless negation without good faith action is
unacceptable. “Meaningful action” to me means:

-->Immediately suspending implementation of the January
Resolution until AFTER there has been a full and public debate.

-->Stating a willingness to reconsider each of the bulleted
actions listed above.

Absent meaningful action by CFP Board, the action steps that occur
to me for certificants to raise are these:

1. Raise a treasury. The CFP Board is using our annual dues to
engage their PR machine in efforts to disparage those of us who
challenge their decisions. It will take money to promote awareness
(among certificants and the public) of our views on these important
issues.

Pledges of totaling nearly $15,000 have been received. Money is
starting to come in. More is needed. If you are willing to
contribute to promoting public discussion, please contact Marty
Kurtz or me [bkohler@bdmp.com].

2. Raise awareness. Many certificants still do not understand the
governance issues at CFP Board that are so critical to the future of
the financial planning profession. We need to get the word out.

Funds should be used to:

   A. Hire a PR firm. We need to develop a strategy to effectively
counter the massive PR effort undertaken by CFP Board to justify
their actions.

   B. Take full-page ads in the trade magazines explaining the issues.

3. Explore the legal issues. The actions taken by CFP Board pursuant
to the January Resolution were apparently taken in violation of the
Disciplinary Rules and Procedures adopted by this very same Board of
Directors. We need to understand:

   A. Whether legal grounds exist to challenge the actions of CFP Board
relative to the DEC.

   B. What are the checks and balances are for a 501(C)(3) organization—
that is, what constraints are there to prevent the directors of such
an organization from taking actions that may not be in the public
interest?

   C. What are the contours of the fiduciary obligations of directors
of such organizations relative to excessive delegation to staff? Can
a board of directors decline to take oversight responsibility for
their organization claiming that they have transferred oversight to
the CEO and given him instructions about what to do and how to do it?

Only once independent legal counsel has provided guidance can we
debate the merits of taking legal action to attempt to have the CFP
Board live up to its obligations to the body of certificants and to
the public.

To be clear, the CFP Board owns the marks. But the marks have no
value without the certificants who actually serve the public. The
CFP Board serves the public interest best by protecting the
integrity of the marks. How they should act to protect the integrity
of the marks is and should be a topic for public discussion with the
certificants and other stakeholders.

I speak here only for myself, but hope that others will begin to see
the importance of these issues and begin to engage in public
discussion about them. Unfortunately, the issues are complex and not
easily reducible to “sound bites.”

The CFP Board is counting on apathy among certificants. This will
allow the Board to continue to abdicate their responsibilities to
certificants. It will also allow them to move ahead in whatever
directions they choose, regardless of what the majority of
certificants feels is appropriate.

The Board can persist in this manner of operating [making decisions
and announcing them (rather than discussing them first)] only if WE—-
the body of certificants-—allow them to do so. I, for one, am
unwilling to allow the Board to continue to act without
accountability to certificants.

BtD, --Barry Kohler, JD, CFP®, CLU
Portland, Maine

 I've been watching and reading and listening for the past 2 months now.  I'm struck by a key issue that is preventing "...the word from getting out...".  It is simply that there are a number of things going on and a number of things that have happened and while current and past 'insiders' understand and grasp the short and long range implications of recent events, the at large community of CFP licensees don't.  Most did not or do not understand how everything works at the Board and what its functions and capabilities are.  Most certificants have their license and go about their living and working lives and take the marks and the Board for granted.

We need to get the word out.... It has to be done simply by spelling it out for people to grab their attention.  The long posts and the white paper are important for the details once people's interest has been piqued and their passions stirred.  They are however, too long and detailed to initially 'suck them in'.  In order to get people curious and interested in taking the next steps, brief bullet point summaries need to be sent out telling what happened,  what potential consequences could ensue and what they should do next.  Unfortunately, I think we must bend to the realities that we all live in and understand that there is only so much attention time available for new issues and we can't catapult ourselves into the forefront to grab people's attention by putting out long and detailed communications.

Naturally, it is difficult to create responsible, short, succinct and passionate communications that will bring people in without sounding like propaganda, but we have to find a way..  I know 4 or 5 respected peers that would be very alarmed at recent developments at the Board, but they're too busy to read the White Paper.  Frankly, they need it spelled out for them.  if we can find a way to do this, I think we will be able to build the critical interest, support and momentum much faster.

 Has anyone heard what is cost to dump the lease in Denver for the move to Washington DC?  My recollection is that they rented that upgraded space when Lou Garday was CEO.  Am I remembering correctly?  m

I've read your excellent white paper and your detailed post. Its easy to get caught up in the momentum and in the apparently justified outrage, but before I do, I'd like to find out what the Board's rational was for making the assorted decisions you listed. Can you tell me where I can find that?

Is there going to be some sort of meeting at Retreat?

Regards,

Alan

 David--

You are absolutely right. Would you be willing to post a sample of the kind message of which you are thinking?

As a "recovering attorney" I can barely say "hello" in less than a couple of paragraphs! :-)

Best, --Barry

 The cost of breaking the lease in Denver and the cost of the lease in DC are more pieces of information never made public or released to certificants, as far as I know.

--Barry

 Alan--

One of the big issues is that the rationale of CFP Board for any of the decisions has never been made public. They meet in secret, decide in secret, then announce a decision in public.

After that, they decide how to implement in secret, give secret instructions to the CEO, decide in secret what will count as success, and move on to the next issue on their also secret agenda.

As for a meeting at Retreat, I speak now only as an attendee, not as a member of the planning committee.

As I understand it, there will certainly be an opportunity for certificants to gather and discuss these issues. Whether CFP Board chooses to have a representative attend this meeting is unknown to me. They tend to choose carefully where and when they will meet an audience of certificants.

My understanding is that there may also be a "town hall" meeting at which representatives of CFP Board of Directors will be present. Hopefully, someone from the Certificants Council will also have an opportunity to present an opposing view, and then questions and comments can be directed to either CFP Board or CC.

--BK

Barry and Marty,

It was in Lou Garday's time that the office was moved a few blocks in Denver.  My understanding was that as a result of the move the Board consolidated space on one floor and built in larger conference rooms - to reduce the costs of the BoG from needing meeting rooms at hotels.  I remember Lou saying that the move would save the Board over $1 million.  It those days discussions like that were made pretty much in the public and the members of the BoG routinely shared information with us.  I suspect that may have been the last financially prudent decision they have made.

During my conversation with Alan Goldfarb a few weeks ago, I asked what the reason for the move to DC was.  He gave me two reasons.  One was that the Board was unable to find the appropriate type of individual they need as CEO in the Denver area - the second was simply to be in the capital - with everything that entails.

Ben

 So let's compose the text of a communication that can be 'Cut & Pasted' into an email to encourage attendance at a meeting at the retreat and to be used to communicate issues and capture general populace attention.  I suggest highlighting the 5 most major items and their respective implications.  Perhaps a 'Before and After' format so that people will be educated at the same time since most do not have reference points from which to view the changes.  We begin and end the communication with a call to action but we have to tell people what the action is.  An email bombardment blast to the Board of Directors?   I myself am unclear as to what the objective is.  if it is to get the executive branch to recant its current position, then perhaps an email and letter campaign would be effective.

David Bennett

 It seems to me that the overarching objective is to have the CFP Board take into account certificant input before any major decision is made. Since they did not do this, I think each of the major decisions, beginning with the move to Denver, need to be reconsidered.

The reconsideration would be the CFP Board would publicly state its rationale for the decision and the costs associated with the decision. Then there would be opportunities for meaningful public discussion. After input from certificants, the Board would either reverse the decision or reaffirm it. The top 5 in my view:

1. The move from Denver to DC.

2. The decision not to have elected Directors.

3. Over-reliance on the Carver model--that is, the Board abdicating its responsibilities to certificants, the public, and other stakeholders by delegating its duties to the CEO. Specifically,

   A. Transferring oversight of the examination process from certificants (the Board) to the CEO and staff.

   B. Transferring oversight of the certificant disciplinary process from certificants (the Board) to the CEO and staff.

OK, there are five points!

--Barry

certificant inp

 I think Director Goldfarb's statement of the "reasons" do NOT explain the move.

What we need to hear is WHY being in DC was deemed so important. Why is it that an office there would not do--that a move of the entire organization was required?

It is a perfect example of Herb Daroff's mantra: "secrecy breeds suspicion."

The suspicions I hear from certificants are that the decision to move the organization to DC was to support a decision made by CFP Board without input from certificants. What decision? The decision to attempt to become the SRO for the financial planning profession and to lobby more effectively for legislation favored by the CFP Board of Directors despite the prohibition on a 501(c)(3) non-profit organization from doing so.

From that [suspected] reason, it follows that a CEO in Denver would not fill the bill. What was desired was someone who knew his or her way around DC, legislation, lobbyists, financing folks, PACs, etc.

I do not think the move to DC was or is supported by a majority of certificants and the decision should be among the first to be reconsidered. Everything went quickly downhill since the Board announced the move.

We need a public discussion about whether CFP Board of Standards should move back to Denver and find an executive director to lead the organization. I do not think the majority of certificants believe that the overriding criterion for the CEO need be expertise in DC politics.

--BK

Barry L. Kohler, JD, CFP®, CLU

BDMP Wealth Management

100 Middle Street

Portland, ME 04101

Voice/Fax: 207-541-2307      Email: bkohler@bdmp.com

 Original post by Troy Jones elsewhere; reposted by permission:

Barry and all,
The FPA Retreat has created a special meeting with the CFP Board in the
front of the room in town hall style. If ever there were a time to get
awareness out there and ask the tough questions it would be then. Also
the FPA is probably the best ally we could have in bringing whatever
power possible to the CFPBOS.

troy

Troy--

Two points:

1. CFP Board has been very successful in spinning this issue as it best suits them. If a Director from CFP Board has an opportunity to address the town hall meeting and then take questions, it will not afford a fair presentation of the critical issues.

Only if the Certificants Council has a representative who has equal time to make an opening statement will there be a meaningful opportunity to discuss these issues. Then both the CFP Board representative and the Certificants Council representative should be at the front of the room to field questions.

In other words, we need more of a debate forum where both sides have an equal opportunity to state the issues as they see them, not another platform for the CFP Board to spin its version of events.

2. FPA has its own political agenda and issues with CFP Board, and for many reasons, will moderate its role--at least in the early stages of this discussion. We cannot rely on FPA to do the heavy lifting here, even in getting the word out.

That said, the willingness of FPA to make this space available and to offer a venue at Retreat for discussion of these issues is incredibly helpful.

Regards, --Barry

Barry L. Kohler, JD, CFP®, CLU

BDMP Wealth Management

100 Middle Street

Portland, ME 04101

Voice/Fax: 207-541-2307      Email: bkohler@bdmp.com

 Message by Bill Ramsay; reposted by permission:

Thanks Barry for putting additional effort into the discussion. I am
no expert on the functioning of the Board, now or in the past, but
perhaps my limited involvement can add something different than
those who have been in the thick of things.

Dan Candura from the Board gave the ethics class for our FPA
chapter last Friday. I thought he represented well. He did not
discuss in length the recent issues, but there were a few
impressions that I found interesting. Based on Barry's FPA Forum,
it sounds like the concerned certificants feel the Board is becoming
less transparent. Dan represented that the changes to the DEC
were in part because the DEC processes were closed and needed
to be opened up so that the public would not feel the work was done
behind closed doors. That logic seems valid to me, and if the Board
feels openness is important, they should not be closing off Board
meetings. The attorney present sounds questionable, any
explanation for why?

Dan also stressed that the CFP Board is not a membership
organization that exists to serve CFP certificants, but that it exists to
serve the public. It is my opinion that if the CFP Board is not to be
made irrelavent as the regulatory environment continues to evolve
(and the Rand study feels to me as if the SEC wants to justify
transferring oversight to an SRO- hence the conclusions that
brokers and RIAs are providing the same services, the public can't
tell the difference and almost all clients are happy regardless of the
service model), then it is important for the CFP Board to be serving
the public first. If they do, then Certificants will be served by the
public's respect for the Board and the marks. Again this would
seem to increase the need for openness at the Board level
especially. It also would seem to argue for involvement of the
public.

The move to DC doesn't seem unreasonable if the regulatory
environment is about to change. And I seem to recall statements in
the way past that the CFP Board felt that a government sanctioned
regulatory structure for financial planning was inevitable and that
they wanted to be the SRO to do it. Of course, if a finra type
environment is established, that would not seem to me to be very
public friendly. There is way too much that goes on with
unacceptable conflicts with the big industry players, things which get
purified with suitability and box checked disclosures. The obvious
problems with the mortgage and housing bubble fiasco cause two
different reactions based on idealogy- one we need less
government involvement and two we need more government
involvement. Based on the Merrill Lynch rule and Paulson's recent
comments, the SRO route seems like the current administration's
leaning, and if you haven't seen finra's changed persona- here's
their marketing tagline- "Every day FINRA protects investors by
working to keep the capital markets fair". Even their changed name
implies they want to expand their turf.

I do not have the specific terminology, but I seem to recall that Dan
represented that the adopted DEC process was more in line with
other oversight entities? maybe medical boards? It does seem
however that quite a bit of power is concentrated at the CEO level,
could there be an apportioning of DEC selections to the CEO and
some to the Board?

On the fiduciary standard, Dan mentioned how the term fiduciary
has different meanings in different settings and professions (no
detail that I recall). If true, that could be problematic given the
inherent nature of the profession, absolute bests and truths are hard
to come by. He did stress the term "good faith" as having some bite
to it. I'm no attorney so I don't know the full implicatons. I do think
the rework that is the Rules of Conduct seems more manageable
than the former structure.

I don't understand the downside of the exam oversight process
being changed. If the test continues to have a targeted pass rate
(that's what it sounded like the current structure is, no set pass rate,
each test is judged based on how the participants fared, with the
pass rate staying pretty low), then as long as qualified certificants
are involved in making the questions and analyzing the results it
would seem to be OK to have administrative oversight handled by
staff- am I missing the nature of the change?

I seem to recall my impression of the white paper posted by Harv
regarding the training and education of the DEC folks by prior DEC
folks. It sounded like it has worked very well, but I did wonder if
there could be paid folks at the Board who could handle some of
that process, both for less burden on volunteers and potentially
lower risk of important understanding not being passed along if a
group of certificant leaders were less dedicated than what we've
had. Of course the staff folks would need to be competent.