CFP Board crackdown on misrepresentation

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The Certified Financial Planner Board of Standards, Inc. made headlines with a recent crackdown on advisors who were misrepresenting themselves as “fee-only” on the CFP Board website. A fee-only advisor charges a flat fee for services and does not take commission from investment transactions or on the sale of products. The misuse issue isn’t exactly new, but it came to a head when the CFP Board decided to take a hard line against advisors who were calling themselves fee-only, but in actuality did accept commissions.

The topic is covered at greater length in a recent Financial Planning magazine article in the November issue, which is accessible here.

As a CFP designee who works for a fee-only registered investment advisor, I take the misuse seriously and want to point out the larger concern surrounding the news, advisor misrepresentation. In our business trust and honesty means a great deal. After all, we are entrusted with our clients’ financial future.

I encourage all consumers to do the proper due diligence before hiring a financial advisor and seek referrals from trusted family members, friends and business advisors. For accurate and factual information about the advisor you are working with or considering, ask for their form ADV, which is an official document required of any registered advisor by the Securities and Exchange Commission. You can look this up for yourself on the SEC website here. This document will highlight information about the advisor’s business and any past infractions against him or her.

Your advisor should be forthright and provide full-disclosure as to their compensation structure and business model. Don’t be afraid to do your homework and ensure that your advisor is being upfront.

Nathan Boxx, Bradley Newman, Jason Seltzer

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