CFP Board Backs Off Threat to Investigate Planner Rick Kahler

Days after issuing an ultimatum, the CFP Board backed off its demand that well-known planner Rick Kahler meet a Friday deadline to comply with its rules for using the term fee-only or risk an investigation.

The about-face came after Kahler threatened to sue the board partly because, he claims, board officials provided him with 10 months of conflicting advice over whether he can continue calling his Rapid City, S.D.-based planning firm fee-only. Kahler also owns a 50% stake in a real estate firm that receives commissions.

In what may be a first for the board, it released a joint statement with a potential target of disciplinary action. It said the board and Kahler are continuing “ongoing conversations” in which the board “is providing Mr. Kahler with guidance about how to properly identify his compensation.” Until it provides “the guidance Mr. Kahler has requested, [the] CFP Board will not take any disciplinary action related to identification of his compensation.” Neither board officials or Kahler would comment further.

The move drew criticism from former board officials who say the board has not been consistent in its treatment of CFPs over compensation disclosure issues.

‘ARBITRARY’ TREATMENT

“It’s wrong, it’s arbitrary,” says Tina Florence, a former member of the board’s disciplinary and ethics commission who was forced to resign and undergo an investigation before the board sanctioned her and two other officials over a similar issue. “They march us out to the woodshed, guns to our head, and they issue a joint statement with Rick,” she adds. Board officials declined to reply.

The organization’s change of heart on Kahler is the latest installment in an expanding number of battles between the board and different CFPs over use of the term fee-only: the board is defending itself in a costly, ongoing lawsuit; it summarily forced three of its former officials to resign over similar issues, including Florence and its former board chairman; and it granted a seemingly contradictory amnesty last year to hundreds, and possibly thousands, of advisors who were breaking the same rule in their listings on the board’s website last year.

Just last week, the board acknowledged that it allows some planners affiliated with insurance companies that sell commission-generating products to call themselves fee-only, in certain states.

“I’m happy for Rick,” former board Chairman Alan Goldfarb says of the Kahler case, “but I think that’s definitely unfair.”

Goldfarb received the board’s first and only public sanction over a fee-only compensation issue, and was forced to resign after spending 11 years volunteering for the board in different official positions. He thinks that he, Florence and the third sanctioned official should have received a similar opportunity to work their issues out with the board without facing repercussions.

Florence objected to the board’s joint statement with Kahler as further evidence of a flawed disciplinary policy at the board. In her previous career, she worked as a policy analyst for the Oregon’s Adult and Family Services Department. She says she was on a team that helped write a pilot welfare reform law that has since become federal law. “We had to do draft rules and go around and have meetings with people in the community and get feedback,” says Florence, of the dually registered firm Lane Florence in Folsom, Calif. “There is a whole process involved in writing these types of rules and [the board] is not following them.”

Read more:

• Planner Threatens Suit After CFP Board Order 
• NAPFA Faces Membership Loss After Rule Change on 'Fee Only' 
• CFP Board Chairman: Profession Concerned About 'Wrong F-Word'
• Is the Fiduciary Promise for Real? 
• $600,000 Legal Tab in CFP Board Lawsuit?