IF YOU HAVE a complaint against a certified financial planner (CFP), there's a grievance procedure you may not have known about. The CFP Board of Standards in Denver is putting more effort into enforcing its code of ethics.
Sanctions for wrongdoers are mild, to say the least. Injured consumers should first complain in writing to their state securities office or to the National Association of Securities Dealers (NASD) in Washington, D.C., if the planner sells mutual funds or variable annuities.
But the decisions of the CFP board might lead to stronger sanctions than the board alone can provide.
The CFP designation or mark shows that planners have taken courses in various aspects of financial planning. To keep up their right to use the CFP, they have to take an additional 30 hours of financial education every two years.
CFP marks are not supposed to be issued to people with serious disciplinary records in other lines of financial sales. Potential CFPs are supposed to disclose any such problems to the board, but it's hardly surprising when they don't.
Stockbrokers and insurance agents licensed to sell investment-based insurance products have a file at the Central Registration Depository (CRD), maintained by the NASD and state securities regulators. It discloses employment history and any reported legal problems or disciplinary actions.
Since early 1995, the CFP standards board has been checking the CRD before licensing new planners. Around two-thirds of them have a file.
NTC The board also checks with the National Association of Insurance Commissioners to see if a candidate who sells insurance has ever been formally disciplined. State insurance commissioners don't do nearly as much policing as the securities industry does. Still, it makes sense to look.
Certified financial planners have to renew their CFP designations every two years. The board has begun to check CRDs at renewal, too, its associate general counsel, Karen Stevens, told my associate, Kate O'Brien Ahlers.
Right now, only around 10 percent of the names are checked at renewal. The goal is to check them all.
The CFP Board of Standards, however, isn't a regulatory body. If a planner violates its rules, all it can do is revoke his or her right to use the CFP mark. Some customers look for a CFP.
The states are charged with disciplining financial planners. One expert says they may investigate people fingered by the CFP board. A state investigator paid a personal call on a Virginia CFP who'd failed to keep up with an education requirement.
That's why you should report a problem with a planner. It's another way of bringing that planner to the authorities' attention.
To check on the current status of any planner's CFP designation, call the board at 888-CFP-MARK or dial up the Web at www.cfp-board.org.
To trigger a formal investigation, telephone for a grievance packet. You have to back up your charge with written evidence.
The organization accepts complaints only about breaches of ethics (integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence). It doesn't address fee disputes per se or reasonable investments that went sour.
The CFP board seems sincere but is also forgiving. For example, it found that one planner had sent out a misleading sales letter for an investment that had been "enjoined in at least two states." His punishment? A letter of admonition -- but he got to keep his CFP.
Pub Date: 5/12/97