By Hal M. Bundrick
NEW YORK (MainStreet) ¿ How your financial advisor is paid shouldn't be a mystery. And if that advisor is a Certified Financial Planner, it won't be. At least, that's the goal set by the board of Certified Financial Planners as it works to define the compensation structure of the investment advisor industry ¿ and guide its membership to full fee disclosure.
Just over three weeks ago the board removed the "fee only" designation as a compensation method in its "Find a CFP Professional" search engine. The temporary move was made to allow certificants time to review the validity of their claim as a fee only advisor before reclaiming the compensation method. CFP certificants can choose from "Commission and Fee," "Commission Only," "Fee-only" or "Salary."
The backlash from brokers, registered representatives and insurance agents who cannot claim the "fee only" compensation method was swift and boisterous. After wrestling with the issue since, Kevin R. Keller, CEO of the CFP board of directors has issued a statement to its membership on the matter.
"We temporarily removed ¿ for two business days ¿ the "fee-only" compensation field from our "Find a CFP Professional" search tool and added a link in the search tool to our compensation definitions," Keller says in the statement. "We then communicated directly with the CFP professionals who previously selected "fee-only" and asked them to update their profile after reviewing our rules and definitions. We took this action to protect consumers from potential misinformation on our website."
According to the CFP compensation disclosure standards, a CFP professional may describe his or her practice as 'fee-only' "if and only if, all of the certificant's compensation from all of his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage or performance-based fees."