Americans expect their financial advisors to act in their best interests, an expectation that can only be achieved through education, commitment to ethics and rigorous enforcement of high ethical standards. During my 20-year career at the SEC, I worked in the enforcement division, where we focused on investor protection, developing programs designed to detect various forms of financial misconduct, ultimately serving to shield the investing public from bad actors. It is with this background that I joined CFP Board this January as its first-ever managing director for enforcement to ensure that the most prominent credential in the financial planning profession builds on its best-in-class enforcement program that will continually exceed the public’s expectations.
Since joining CFP Board, I have become keenly aware that it is not easy to earn the right to become a CFP professional. Candidates must complete years of training, take special coursework, and pass the challenging CFP exam. Once certified, CFP professionals commit to the high ethical and practice standard set forth in CFP Board’s Code of Ethics and Standards of Conduct. It’s my team’s job to hold them accountable to that commitment.
CFP Board created my position a little more than a year after a critical Wall Street Journal article and an Independent Task Force on Enforcement called for CFP Board to make important reforms. The most significant recommendation was that “CFP Board should substantially increase the resources devoted to ensuring that its enforcement program is reasonably designed to achieve an appropriate level of compliance by CFP certificants with CFP [Board’s] standards of conduct.”
As an outsider to the organization, I came into the role aware of the public dialogue. I didn’t know what to expect from the staff, the CEO or the board of directors. What I found was an organization committed at all levels to a well-funded, first-class enforcement program. I also found that CFP Board had already undertaken much of the work that it needed to get there.
By the time I arrived, CFP Board had already addressed the Wall Street Journal’s primary criticism by adding links on its consumer-facing websites to SEC and FINRA disclosure information. CFP Board had also ended its heavy reliance on self-disclosure as a primary means of detection. It undertook the herculean task of conducting background checks and applied automated technology to cross reference the approximately 90,000 CFP professionals against public databases to identify potential misconduct that had not been self-reported to CFP Board.
As part of this review, CFP Board looked into the thousands of CFP professionals whom the Wall Street Journal found to have a disclosure on FINRA’s BrokerCheck. CFP Board found that a lot of the information on BrokerCheck (such as dismissed customer complaints) did not reveal wrongdoing.
In the end, 1,266 investigations were opened as a result of this one-time historical review, and a Board-approved investment of approximately $5 million has enabled CFP Board’s enforcement team to deploy the majority of its fourteen full time staff as well as the addition of more than two dozen lawyers and analysts to vigorously pursue these matters.
In all, I have been impressed with the work that preceded my arrival. CFP Board’s general counsel and director of investigations put in place sound processes to detect misconduct and have set us on course substantially to complete the 1,266 investigations by year end. And the staff I inherited are as talented and experienced as any I’ve worked with during my career and include alumni from the SEC, FINRA and the New York Attorney General’s Office. They are dedicated to the mission and have built a strong culture.
CFP Board’s commitment to a strong enforcement program for its Code of Ethics and Standards of Conduct doesn’t end there. In February of last year, CFP Board appointed two individuals with enforcement, risk and compliance expertise to its board of directors, and in October announced key governance changes that placed enforcement directly under the board’s oversight. These organizational updates give me confidence that CFP Board treats enforcement seriously at the highest level of its leadership.
The progress that preceded my arrival has allowed me to spend a good portion of my time on workflow, technology, and additional detection measures. We have implemented several initiatives designed to advance CFP Board’s mission to benefit the public by strengthening our capacity to effectively identify and investigate alleged violations by CFP professionals. This includes raising the visibility of the complaint form on the consumer website LetsMakeAPlan.org to help consumers more easily notify us with concerns about potential misconduct by a CFP professional. We have established systems to gather additional data and better track our enforcement work. And we have taken steps to build upon efforts that began before I arrived to strengthen CFP Board’s relationship with the SEC, FINRA, state regulators and other organizations that can help CFP Board advance its enforcement program.
All of this speaks to two core principles of a credible enforcement program: A detection strategy designed to promptly identify potential misconduct; and procedural safeguards in place to provide a fair forum for those CFP professionals who come under investigation.
I took this job because I believe that I can help CFP Board build upon the actions it has taken in recent years to strengthen enforcement of its Code and Standards and uphold its commitment to benefit the public. My team and I will be working tirelessly in the months and years ahead to weed out the bad actors and provide confidence to hard-working Americans that when they need financial advice, the CFP professionals they retain are subject to an enforcement program that is the most respected and toughest in the profession.