Board ‘Dysfunction’ Amid ‘Vile’ Dispute Was Behind Demise of New York Chapter, Says FPA
It has been more than a month since the Financial Planning Association terminated its affiliation agreement with its New York chapter, and the impact on rank-and-file FPA members of this unprecedented scandal still remains difficult to assess.
“They’re circling the wagons because they’re very defensive about a lack of good governance” as shown in the blowup at its high-profile New York chapter, Don Trone, head of the leadership consultancy 3ethos, says of the FPA’s efforts to contain the story.
FA-IQ reached out to at least 20 of FPA of New York’s approximately 550 non-board members for comment on the chapter’s termination. Not one advisor contacted provided on-the-record comment. Earlier, the FPA’s national organization, based in Denver, blocked an FA-IQ question to its membership via the association’s MediaSource media query form on its website.
For Mystic, Conn.-based Trone, it’s ironic that the FPA, “an organization that holds itself out as a guardian of the fiduciary standard” would effectively block the press from talking to its members.
On April 2, FPA of New York members and sponsors received a memorandum from the chapter, which has been obtained by FA-IQ. The memo was signed by Scott Kahan, a past president of FPA New York who has assumed the chapter’s interim leadership since its termination in early April. It refers to the termination in oblique terms, saying that “in the coming weeks and months, a chapter leadership transition will occur.” In this period, Kahan says he will oversee this change while working “with New York volunteer leaders to ensure that members will continue to receive the quality support they deserve.”
Kahan doesn’t say in the memo why the FPA terminated the New York chapter’s affiliation — beyond intimating that “sometimes changes in volunteer leadership must occur to better meet the needs and the requirements of service to members.” But he underlines the chapter’s commitment to staging a number of previously scheduled events, including its annual forum on June 1.
But there may be clues to the FPA’s motives in a March 27 complaint filed with the New York State Attorney General’s Charities Bureau by Devika Kamboh — a financial advisor and president of the FPA of New York at the time of the chapter’s termination.
In this document, which is publicly available, Kamboh says she was labeled by fellow FPA of New York board members as “a troublemaker, a lone wolf, and a whistleblower,” and claims she has been the subject of “ongoing retaliation against me as an officer and a woman of color” by the board of FPA of New York because — starting in 2017 when she was president-elect of FPA of New York — she objected to some board members allegedly soliciting clients at pro bono education events and, separately, for the purposes of solicitation, sharing the contact information of attendees at such gatherings.
“By assigning clients to themselves,” Kamboh says in the complaint, the board members “violated our mission of being an educational institution whose policy is not to use the organization to directly solicit clients.” Kamboh adds “the gathering of information on attendees circumvented the referral program” — she means the FPA’s FA-search engine at www.plannersearch.org — “where all eligible CFP members of the FPA and [FPA of NY] are listed, which is set in place to allow the public to research the qualifications of all members and choose based on the specific needs of the individual.”
When her complaints were rebuffed in late 2017 by the executive committee of the FPA of New York, Kamboh says in the complaint that she approached national FPA chief operating officer David Brand. In response, Brand “suggested I overlook these potential conflict of interest violations ... and use this as a learning experience to set more robust [FPA of New York] guidelines,” Kamboh alleges in her complaint to the New York State Attorney General.
Kamboh apparently declined to let the matter drop, and the executive committee of FPA of New York’s board “unsuccessfully tried to vote me off the board of [FPA of New York] by threatening and bullying other board members to vote against me as ongoing retaliation to my efforts at transparency and conducting my fiduciary responsibilities,” she alleges in the complaint.
“As a result of the exposure to liability due to the conduct of those violating policies, the FPA has now decided to dissolve the [FPA of New York],” Kamboh writes in her complaint. On March 22, she says the board of FPA of New York learned the FPA had terminated FPA of New York as an affiliated chapter and appointed “a past president” — Kahan — “to handle all [FPA of New York] chapter business while giving directions to all [FPA of New York] board and officers to not conduct any [FPA of New York] chapter business, or communicate to the membership, our partners or sponsors.”
Reached by FA-IQ, Kamboh declined to elaborate on her complaint to the New York State Attorney General.
Syracuse, N.Y.-based Joseph Lazzaro, who is president of the FPA’s central New York chapter and a principal of CenterBridge Planning Group, says that in the immediate aftermath of the Big Apple chapter’s termination, his board — and he assumes others around the country — received a reminder from the FPA “just making sure that when we go to an event we represent the FPA and not our own practices.”
Adds Lazzaro: “People in New York were using those events as a prospecting tool — and I guess they learned the hard way on that one.”
The FPA’s CEO Lauren Schadle is more reticent about what may have happened to send FPA of New York’s board into meltdown. Calling it “not an experience anyone wanted” and “a pretty extreme situation,” she says, “we need to clear things up there, and we’re absolutely going to do that.”
But Schadle won’t say if FPA of New York members explicitly representing the FPA at FPA events understood they were expressly barred from soliciting clients. “We can’t go back,” Schadle tells FA-IQ in an interview arranged before the FPA objected to attempts to reach rank-and-file members. “We’re looking at the policies right now and, like I said, we will clarify them.”
Meanwhile, Trone says the FPA is slow to take a hard line on such matters on the mistaken belief that volunteers, whom its chapters rely on for pro bono events and to raise funds for its activities, will be harder to enlist.
“That’s why they went easy,” Trone says of the FPA’s intervention in New York. “They did not bring in independent legal counsel to investigate, and they did not stand by their person” — that is, Kamboh, the chapter’s president — “which is what you’re supposed to do until a thorough investigation tells you otherwise.”
In sum, says Trone, “There is no evidence that national applied procedural justice in this matter.”
For Trone, this kid-glove approach is misguided “because these volunteers are professionals in a profession that requires tough skin. They don’t need to be coddled.”
Through spokesman Ben Lewis, the FPA says any suggestion it goes easy on its volunteer leadership is “absurd.” If it were trying to protect any of its volunteers in New York, “we would never have taken the extreme measure of terminating the affiliation agreement with the FPA of New York chapter,” he says in an email to FA-IQ.
As for Trone’s assertion that the FPA could’ve handled its New York chapter with more transparency and skill, the national organization implies its hands were tied. The association tells FA-IQ it insisted “FPA of New York board of directors engage in an immediate mediated process to resolve their differences” with a view to investigating and resolving the issues “while the existing board was in place” — including chapter president Kamboh. But it came to see “that this process wasn’t even possible because the interactions between the board members were so dysfunctional and discourse between the board members so vile, that we had to take the action to dissolve the affiliation agreement to ensure the policies going forward are being appropriately interpreted and applied.”