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CFP Board Reviews Sanction Guidelines

The 15-member Commission on Sanctions and Fitness will also look to revise the standards for those who are hoping for CFP certification.

A new Certified Financial Planner Board of Standards commission will reexamine the guidelines the board uses to accept applicants for the CFP designation as well as how CFP professionals should be sanctioned when failing to comply with its code of conduct.

The 15-member Commission on Sanctions and Fitness includes investor protection advocates, state securities regulators, and financial and wealth planning executives from across the industry. CFP Board CEO Kevin Keller called the new commission “fundamental” in strengthening enforcement protocols for implementing its Code of Ethics and Standards of Conduct, which went into effect last June after a multiyear development process.

“We very much appreciated the work that they will do to help ensure that our enforcement process remains credible to the public and fair to those whose conduct is being evaluated,” Keller said.

The commission will be reviewing the sanction guidelines that were established to assist the Disciplinary and Ethics Commission (DEC) when deciding how to punish CFP members who break the rules. The current guidelines list several “aggravating or mitigating factors” the DEC could take into account, including whether the professional had a prior sanction, whether they acknowledged the issues at stake and whether the Board found a pattern of misconduct. 

The fitness standards apply to CFP applicants as well to “ensure that an individual’s prior conduct would not reflect adversely” on the reputation of the CFP certification; applicants would be immediately barred for felony convictions for “theft, embezzlement or other financially-based crimes,” as well as tax-related crimes, among other things. An applicant with two or more personal or business bankruptcies would be “presumed to be unacceptable” for acceptance, according to the standards.

In an interview with, Keller said it was best to see the review as the “third and final phase” of a total review of the Board’s enforcement process, beginning with the revised code of ethics and followed by last year’s overhaul of its procedural rules, with the DEC deciding on whatever sanctions it deemed appropriate.

“It was a bit controversial in the beginning, like sentencing guidelines; judges aren’t always thrilled about sentencing guidelines,” he said. 

But he said the guidelines helped instill a system that was fair to certificants and credible to the public. Keller called the the commission's members “a broad cross selection” of industry participants, including both CFP and non-CFP professionals, and stressed the value in attracting members with different business and compensation models.

“It was important for us to have public member representation, to have regulators,” he said. “Not that we’re a regulator, but we are committed to enforcing our standards.”

In a Twitter thread today, XYPN co-founder Michael Kitces commended the Board on the commission, saying it consisted of many “serious names.” While Kitces noted that the Board could only go as far as revoking its certification from a professional (and cannot bar individuals from the industry), it does publicly announce many of its sanctions, which could have a large impact in a “Google-searchable world.”

“In practice, the Disciplinary and Ethics Commission can still take into account mitigating and aggravating factors before doling out a punishment. So the sanction guidelines are guidelines, not prescribed punishments. Still, they're REALLY important to set the scope,” he wrote. “And with the new Standards of Conduct, the CFP Board and its DEC will soon face a new wave of potential enforcement cases for ‘CFP fiduciary violations.’ Which can vary greatly in impact (from failure-to-disclose to bad advice to fraud). So new guidelines are definitely needed.”

After the commission develops recommendations with input from the public and financial planners, it’ll release proposed revisions for one or more comment rounds before the final revisions are released (due to the size of the task, Keller expected the full process may take until 2022). The next step for the Board will be to host two virtual forums on Feb. 18.

Among the commission’s members are Andrea Seidt, the Ohio Securities Commissioner at the state’s Department of Commerce and chair of the North American Securities Administrators Association’s Regulation Best Interest Implementation Committee, and Elizabeth Jeter Hrubala, the president and owner of Jeter Hrubala Wealth Strategies. The commission also includes Envestnet MoneyGuide COO Joseph Miller, Demetra Sullivan, a vice president at Schwab, and Jeffrey Weekes, a vice president and financial advisor at Morgan Stanley.

TAGS: Industry
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