This Board of Standards Doesn’t List Complaints Against Its Members – What Is It Hiding?

Here’s your “Slap in the Face” Award for this week. And it’s one for the Certified Financial Planner Board of Standards Inc. and a wake-up slap for all of us.

An investigation by The Wall Street Journal found that this organization that controls the CFP (certified financial planner) designation – which, by the way, is very difficult to get – has a major shortcoming.

The CFP Board of Standards hosts a website called Let’s Make a Plan. The website lists more than 72,000 profiles of CFPs and is intended to be a resource for anyone searching for help with their investments.

Sounds like a great idea – but the website doesn’t list any of the customer complaints, criminal issues or regulatory problems that many of its members have had.

The amazing part is that all of the 6,300 planners who The Wall Street Journal found had some kind of an issue in the past did report them to the Financial Industry Regulatory Authority (FINRA).

The FINRA data shows more than 5,000 planners listed on the Let’s Make a Plan website have had complaints filed against them by clients over investment recommendations and sales practices, have left firms following allegations of some kind of misconduct, or have been disciplined by financial regulators.

But none of these complaints are listed on the CFP Board’s website.

Still, the CFP Board of Standards claims it holds its planners to a “higher standard than regulators do.”

One of these high-standard advisors who was featured in The Wall Street Journal’s report had more than a dozen claims against him that have cost the firms he’s worked for $1.5 million to settle. None of these appear on the board’s website.

The only red flags that do appear on this website are disciplinary actions imposed by the CFP Board itself or bankruptcies that have occurred within 10 years.

The website excludes actions by the U.S. Securities and Exchange Commission (SEC), FINRA, the Department of Justice and state authorities against CFP Board members.

How utterly convenient!

Since The Wall Street Journal’s report, the CFP Board has included a disclaimer on the website that says, “You may find additional information about a financial planner at FINRA or the SEC.”

To be fair, not all complaints against brokers or CFPs are credible. And not all complaints necessarily involve betraying the trust of a client.

But before you do business with anyone in the money business, your first stop should be the FINRA and SEC websites. They will list all the complaints filed against both CFPs and financial advisors.

Most of us have no way to replace our money. The last thing we need is to have an advisor who is working in their best interest, not ours.

Check them out before you write a check.

Good investing,

Steve