Updated Monday, December 22, 2014 as of 10:44 PM ET

Many Wirehouse CFPs Did Not Tell Clients They Weren't Really Fee-Only

Conversations with 20 of the nearly 500 wirehouse advisors who had inaccurately been calling themselves fee-only on the CFP Board website failed to turn up any who informed clients of the change in their compensation disclosure.

Get access to this article and thousands more...

All On Wall Street articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.

Already Registered?

Comments (5)
This article seems to cast many respondents in a bad light and if that is the level of intelligence that licensees have, then the Board is in trouble.
Posted by Consumer A | Thursday, February 06 2014 at 12:17PM ET
"Fee-only" implies a neutral, objective & fiduciary adviser. Which is impossible in a wirehouse or BD. Just add this latest issue to the list of things Wall Street doesn't tell its customers.
As to making "fee-only" meaningful (because it isn't), it needs to be broken down into at least types: flat-fee per plan or service, hourly fee for plan or service, % performance fee, and % fee for assets under management. Currently, advisers using any of those would be justified in calling themselves "fee-only".
And then there is my hybrid fee structure which is fee minus commission, which I believe is the most ethical.
Let's face it, AUM & performance fees are really commissions because they're transactional and product-linked.
We all know advisers who triple tip their clients, charging a flat fee, AUM fees as well as performance fees. I hope they're a vanishing breed.
Posted by Gary D | Friday, February 07 2014 at 3:08PM ET
The CFP Board has completely botched this. For years they let wirehouse and BD based CFP's represent themselves as fee only when it's common industry knowledge that most every wirehouse and BD rep takes commissions or trailers of some sort. Now, as the Boards compensation disclosure rules unfold, salary + bonus compensated CFP's based at Wealth Management arms of banks and insurance companies whose clients pay ONLY fees are prohibited from calling themselves fee only because the bank or insurance company may also own a far removed, unrelated, completely separate retail division that does receive commissions. Why? Makes no common sense.
Posted by JEFFREY H | Friday, February 14 2014 at 4:59PM ET
There is no such a thing as "fee only" and the Board is a bunch of jackasses for continually trying to misinform the public otherwise.

Even when a CFP charges no up front fee for advice on, let's say life insurance, when that client visits a referred life insurance broker who kicks back part of the commissions to the CFP - how can that CFP seriously be considered "fee only"?

Everyone makes additional income through services purchased after being recommended by a CFP.

It's the CFP Board who is lying to public here - and it always has been.
Posted by Dean R | Monday, February 17 2014 at 2:41AM ET
@Dean

Not everyone accepts referral fees or kickbacks and there are many people whose source of income comes only from their clients.

If you are an RIA you do need to disclose whether you accept or pay referral fees, so if you indicate that you don't and yet do, then you have misrepresented yourself.

I am not certain that the CFP Board has been lying, but it does seem as if NAPFA and the journalists who throw the term "fee-only" about may have been misleading the public.
Posted by Consumer A | Monday, February 17 2014 at 12:33PM ET
Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Already a subscriber? Log in here