The CFP Board admits that it could have done a better job when it first added compensation disclosures to its “Find a CFP” website in April 2011. There was controversy over the category definitions and how rigidly they should be applied, and some advisors listed as fee-only were not. But the Board is now taking steps to address issues over compensation disclosure, starting with a systematic review of about 3,500 CFP holders who identify as “fee-only” on the website. Advisor firms and broker/dealers will also have the option of having CFPs associated with their firm blocked from checking the “fee-only” box in the portal.

“Recognizing that we could’ve done a better job, the board has told Kevin [Keller], and he to his executive leadership team, that we’ve got to do better going forward,” said Ray Ferrara, chairman of the CFP Board, in an interview with WealthManagement.com. (Kevin Keller is CEO of the organization.)

“There has so much written about the value of fee-only that everybody wants to be able to check that box,” Keller said. “When people look at our rules and don’t find an easy way to check that box, I think they sometimes come back to us and say, ‘Your rules aren’t clear.’ But if you look at our definition of fee-only, it is unambiguous.”

In the coming weeks, the CFP Board will use a risk-based approach on a random sampling basis to determine, through publicly available information, whether or not those CFP holders are fee-only based on the CFP’s rules.  

“Where they are not, we will pass that information on to our professional standards department, who will review the situation and, if warranted, will begin an investigation, going through our full and fair process just like the Camardas had,” Ferrara said. 

The Board will eventually review compensation disclosures for all certificants on the website.

The CFP Board has been in the headlines lately over controversies related to compensation definitions and disclosures on its website and how CFP certificants are punished for such violations. Last fall, the Board became aware that some CFPs were misrepresenting their compensation as “fee-only,” and the Board removed “fee-only” data from 8,000 advisors who were using the tool, asking them to review their compensation method and change it if need be.

Compensation is used as criteria for choosing a CFP professional on the site 10 percent of the time, Ferrara said. Rather, most people choose a CFP based on geographical location. Advisors also have a “choose not to disclose” option.    

Meanwhile, the CFP Board has been mired in a lawsuit related to a disclosure violation. Jeff and Kim Camarda, who run Camarda Advisors and Camarda Consultants, filed their suit in June 2013, alleging the CFP Board failed to provide a fair and just hearing on their use of the term “fee-only” to describe their compensation model to clients. The Board recently released over 300,000 pages of requested documents to the Camardas as part of a court order.

“Regardless of the discussion around compensation that’s related to that litigation, we think the core part of that litigation is whether we, as an organization, have a right to set our rules and enforce our rules,” Ferrara said. “Certainly the Camardas have the right to sue. This is America. Anybody can sue. But the board has instructed Kevin and the executive leadership team to vigorously defend the litigation.”

In a recent survey conducted by WealthManagement.com, 32 percent of CFP licensees felt the recent scandals involving the CFP Board detract from the perceived value of a CFP designation in the eyes of clients or prospects. About 54 percent said they don’t trust compensation disclosure on the CFP’s website.

“At the end of the day, we’re really talking about a very small subset of people that’s getting an awful lot of attention, but it’s important,” Ferrara said, referring to CFPs who say they’re fee-only and may not be. “We have to get it right.”