Susan John, CFP® Addresses CFP® Professional Community

Dear CFP® professional,

On Monday, CFP Board sent word that the compensation search field would be removed from the “Find Your CFP® Professional” tool on Letsmakeaplan.org. This decision was made during my term as Board Chair in 2019. This was a conversation that began in the fall of 2018, continued into the winter board meeting and adopted in a Resolution that was passed the following spring.

I voted to remove the compensation search field from the website because our updated Code and Standards requires all CFP® professionals to act as fiduciaries, regardless of their business model or compensation method.

As fiduciaries, all CFP® professionals must provide a Client with detailed compensation information, which explains how Clients pay for products and services and describes any additional costs they may incur, including product management fees, surrender charges and sales loads. CFP® professionals must also disclose how they, their Firm and any Related Party are compensated for providing products and services.

As most of you know, I have been a fee-only financial planner for over 30 years. I have always ascribed to a fiduciary standard. Selecting a financial planner professional to guide one through some of life’s toughest decisions should not start with how that professional is paid. People want a financial planner professional they can trust and that begins with the professional acting as a fiduciary in the Client’s best interest at all times. Among other things, that means being competent to address the Client’s issues, to accept responsibility for monitoring the Client’s progress toward their goals and to provide the guidance that any trustworthy relationship demands.

As a standard-setting and credentialing organization, CFP Board has an important role to play in shaping public dialogue. The focus of that dialogue should be on the word “fiduciary” rather than “fees.” CFP Board has always been compensation neutral, believing that the best compensation method depends on each Client’s unique circumstances. It is wonderful to see that new compensation models are available to provide the public with more options.

The Board’s decision is consistent with the Board’s conviction that a CFP® professional be ethical, competent and act in the Client’s best interest at all times. Isn’t it time we started defining ourselves by what we do rather than how we are paid?

This in no way diminishes our conviction that consumers have a right to know how they are paying for products and services and how a CFP® professional (and a CFP® professional’s Firm) is being compensated.

As stated above, under the revised Code and Standards, CFP® professionals are required to describe how they are compensated before or at the time of engagement. Eliminating the compensation tool from the site has no bearing on CFP Board’s responsibility to take appropriate disciplinary action against certificants who misrepresent their compensation to consumers. It is the duty of the Board to take disciplinary action against those that misrepresent their compensation to consumers.

By expanding the scope of fiduciary duty — and educating consumers about what that means — the Board acted in a way that we believe serves the best interests of the public and profession.

Sincerely,

Susan John, CFP®
2019 Chair, CFP Board’s Board of Directors
2010-2012 Chair, National Association of Personal Financial Advisors