CFP Board Proposes Additional Disclosures

How much more can we possibly disclose?""I already disclose everything! It's ludicrous!"These are some of the comments from CFPs regarding a proposal from the CFP Board of Standards requesting more detailed compensation disclosures.The proposal would require planners to disclose more than is generally required under current broker regulation.CFPs would have to itemize for clients where their revenues

How much more can we possibly disclose?"

"I already disclose everything! It's ludicrous!"

These are some of the comments from CFPs regarding a proposal from the CFP Board of Standards requesting more detailed compensation disclosures.

The proposal would require planners to disclose more than is generally required under current broker regulation.

CFPs would have to itemize for clients where their revenues come from--the percentage from fees, commissions and other sources that are "material." Also, specific percentages and dollar amounts for any referral fees, commissions and deferred loads would have to be disclosed at the time a recommendation is made.

Current CFP disclosure rules require the planner to give a general statement about compensation to clients.

The proposal essentially parallels existing rules for investment advisers, says Lisa Roth, a San Diego compliance consultant.

"What's dramatic about this is that registered reps who aren't advisers but who are CFPs will be required to provide these things," Roth says.

Not all CFPs like the idea. "It's gotten to the point where it's simply foolish," says Ken Caplan, a CFP based in Orange, Calif.

"What the board is doing is a waste of time--for them and for us," says a CFP in Philadelphia.

The proposed compensation disclosure idea came from a focus group of consumers, according to a CFP board spokesperson. The consumers used or planned to use a financial planner, and felt it was important to know the source of the adviser's paycheck, the spokesperson says.

"It's not that [CFPs] are trying to keep something from the public," Caplan says. "When you're already disclosing everything, what's the purpose? It's like [the board] wants to have tumult."

The CFP board has extended the comment period to Dec. 31 and moved the proposed implementation date forward to Jan. 1, 2002.

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