Financial advisor failed to disclose he had sued the organization his paper criticized

Jeffrey Camarda

Earlier this year, a financial advisor published a paper purporting to find that his colleagues who had pursued accreditation as “Certified Financial Planners” (CFPs) were more likely to engage in misconduct. 

What the paper didn’t mention: That he had sued the CFP Board, the organization that offered that certification, and given up his own CFP marks “over a dispute regarding the integrity of the CFP Board’s disciplinary process,” according to a correction to the article published in April. 

“The editors have determined its disclosure would not have impacted the peer review process, but it has since been added to the article for the benefit of readers,” the notice stated. 

The article, “Badges of Misconduct: Consumer Rules to Avoid Abusive Financial Advisers,” was published in the Journal of Financial Regulation in February. In the abstract, the authors described their findings: 

Using an adviser misconduct scoring framework we report specific misconduct ratings for each of the 625,980 Financial Industry Regulatory Authority (FINRA) advisers, finding elevated misconduct for Certified Financial Planner (CFP®) professionals and commission/fiduciary licensees.

The authors concluded that their findings “suggest that consumers who rely on a single market signal should avoid CFP® professionals if they wish to reduce misconduct risk.” But one of the group’s former collaborators has raised concerns that aspects of the methodology make the findings unreliable. 

The paper’s first author and the subject of the correction notice, Jeffrey Camarda, a financial advisor with his own firm in Jacksonville, Fla., told Retraction Watch that “my CFP disciplinary issues are pretty ancient history,” and he considers them “unrelated” to the research. 

In 2013, Camarda and his wife sued the CFP board alleging the organization had unfairly attempted to discipline them. This attempt, they alleged, amounted to breach of contract, unfair competition and violations of the Lanham Act, which established federal trademarks and forbids false advertising. The CFP board, which has not responded to our request for comment, denied the allegations in a legal filing. 

A judge dismissed the Camardas’ case in 2015 at the request of the CFP board, writing that “Plaintiffs have identified no facts that demonstrate that defendant failed to follow its own procedures… In reviewing a disciplinary action by a private organization, courts do not ‘second-guess’ the organization’s interpretation of its own rules or its evaluation of the evidence.” 

The Camardas appealed the dismissal, but the appeals court upheld the decision. 

In 2017, after the legal battle ended, the CFP board published its disciplinary findings that the Camardas had misrepresented their advisory business as offering “fee-only” investment management and financial planning. This representation was inaccurate, the board determined, because they had a related business that received insurance commissions, and the businesses paid each other referral fees.   

“I think the process was bullshit,” Camarda told Retraction Watch. “We can demonstrate conclusively we were at all times in compliance with CFP® Board’s rules during the years we were licensed.” He and his wife voluntarily resigned their certifications because they had “lost respect for the integrity of the organization,” he said.

In a 2019 article for Forbes, titled “America’s Broken Financial Advisor Promise – What’s Wrong with the CFP Board & Why You’d Better Check Twice Before Trusting a Certified Financial Planner,” Camarda included an extensive disclosure about the CFP Board disciplining him and his wife and their lawsuit. 

But Camarda said he didn’t see how his history with the CFP Board was related to his recent paper, because the research wasn’t about the organization’s disciplinary processes. 

According to emails seen by Retraction Watch, Dan Awrey, a co-managing editor of the Journal of Financial Regulation and professor at Cornell Law School, wrote to one of Camarda’s co-authors in March, asking why the authors had not disclosed the potential conflict of interest as they had in previous work. In response, Camarda elaborated: 

Our research for you is not about CFP Board per se, but about the many factors (13 x 3 measures) that can be correlated to the documented misconduct we presented in the study; less than half of the studied independent variables include the CFP, and I note that some of the findings were actually favorable to CFPs, concluding  CFPs with fiduciary investment licenses demonstrated the generally greatest degree of misconduct suppression. I am not really sure what the conflict would be, other than my past association and travails with them – about which I don’t feel conflicted at all. [emphasis original]

After discussion with the other managing editors and Oxford University Press, the journal’s publisher, Awrey wrote back to Camarda with the plan to publish the correction and add the conflict of interest statement to the article, which Camarda approved. 

We reached out to Awrey for comment, and got an auto-reply that he is on sabbatical. We also reached out to co-editor Geneviève Helleringer of the Essec Business School Paris-Singapore and University of Oxford, and did not hear back. 

As for his lawsuit’s relevance to an article that critiqued the CFP Board, Camarda told Retraction Watch he wasn’t the only one criticizing the organization, pointing to coverage in the financial press. “It’s not like I’m the lone voice out there.” 

After communicating the decision to publish a correction, Awrey sent Camarda another email on March 27 with the news that 

The individual who brought the conflict of interest issue to the attention of the JFR Editorial Board has raised another objection to the paper, this time based on how you and your co-authors count the number of financial advisors in your study. 

Awrey quoted a paragraph apparently from the “objection” he had received: 

There is no credible source that claims there are 600,000+ financial advisors in the US. The Bureau of Labor Statistics estimates there are 263,030; Zippia estimates there are 241,225; Cerulli Associates — largely considered the most reliable industry source — estimates there are 311,305… The authors knew there are not 626,000 financial advisors. Their own prior work described this issue in great depth. They included 300,000+ non-advisors because it created the illusion they wanted to create.

Camarda responded the next day that he thought the quote from the person who had contacted the journal was “delusional if not deceptive,” and attached papers that he said found similar numbers of financial advisors as he and his coauthors used in their work. He wrote: 

To be clear, our data includes all individuals licensed by FINRA to sell securities on a commission basis: “brokers”. This is the actual regulatory count, not a mere estimate  and should trump “estimates” of financial advisors, itself a squishy term that, for instance, often includes CPAs or life insurance sales agents that are not FINRA licensed.

On March 30, Awrey wrote back: 

We really appreciate your continued cooperation. From our perspective, we now consider this matter closed. My sincere apologies for the runaround and any anxiety or frustration it may have caused.

A former collaborator has also publicly raised concerns about the paper’s methodology. Soon after the article was published, Derek Tharp, a CFP and assistant professor of finance at the University of Southern Maine, published a blog post pointing out issues in the data. 

Specifically, Tharp wrote that it was likely that less than half of the nearly 626,000 professionals registered with FINRA Camarda and his co-authors analyzed were financial advisors, so the relationship they found between CFP certification and advisory-related misconduct was “a classic spurious correlation.” He cited a paper he had published previously–with Camarda–that had proven the same point about using the FINRA data. 

“It is simply untrue to state as fact that our data was so tainted by non-advisors as to be invalid,” Camarda wrote in an extensive comment responding to Tharp’s post. “Even a casual reading of our paper makes clear we only include those with the Series 7 or 6 commission sales licenses all in the industry should appreciate are associated with retail ‘advisors.’”

In a reply, Tharp wrote that “your method of limiting an analysis to only Series 6/7-licensed individuals is not remotely sufficient for removing non-advisors from your dataset.” 

Camarda’s response also critiqued the other paper Tharp cited in the post on which he was a coauthor. The additional data Tharp used to limit FINRA’s list of licensees to only financial advisors was “unreliable” and not suitable for research, Camarda said, and Tharp had thrown out a lot of the data. Camarda sent the critique to Mark P. Taylor, the editor of Applied Economics Letters, which published the paper. He said he had not received a response, and neither did we when we reached out for comment. 

Camarda also told Retraction Watch that he was “not happy” his name was on the paper, as he had withdrawn from the research project. 

Tharp disputed that Camarda had withdrawn from the project, and that the data he had used was not good enough for research. As far as the data he excluded, he told us: 

The purpose of limiting the sample to only those working solely as financial advisors was not to try and claim that we had provided a comprehensive identification of all advisors within this market. It was to examine whether the observed positive correlation between CFP status and misconduct persisted when the analysis was limited to only those solely working as financial advisors. If we would have found that this relationship persisted, then this would have cast serious doubt on my suspicion that the positive correlation was being driven by a spurious relationship.

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