How a Public Member Played a Critical Role in an Organization’s Risk Management

By Kevin R. Keller, CAE, and Denise Voigt Crawford, JD, CFP Board

At Certified Financial Planner Board of Standards, Inc. (CFP Board), public members have long played an important role on our board of directors. With our 501(c)(3) tax status and our mission to benefit the public by granting and upholding CFP® certification as the standard for competent and ethical personal financial planning, public representation on our board is essential. Public members are constant reminders of CFP Board’s public mission. Our bylaws require that at least two board members specifically represent the voice of the public at all times. Today, four of our 16 voting board members are public members.

Why are public members important? A situation CFP Board experienced in recent years illustrates the vital contributions public members can make to an organization, especially with regard to risk management.

In 2019, CFP Board was the subject of an investigation by The Wall Street Journal that found some of our certificants had disclosures on regulatory websites that were not referenced on CFP Board’s website. A high-profile article questioned the effectiveness of CFP Board’s enforcement processes and the information CFP Board makes available to the public about its certificants — two key elements of public trust in our CFP certification.

Taking Action

The board of directors took immediate steps to address the criticism. Perhaps most significantly, the board formed an independent task force on enforcement to conduct a thorough review of CFP Board’s enforcement processes and to recommend improvements.

To lead this task force, the board selected one of its public members with a regulatory background: Denise (Denny) Voigt Crawford, JD. Crawford served as the Texas Securities Commissioner for 17 years and was twice-elected president of the North American Securities Administrators Association. The board gave Crawford authority to recruit task force members, provided the resources needed to develop the report and let them do their work.

Establishing a truly independent task force was a brave thing to do. And Crawford’s appointment as its chair demonstrated the board’s recognition in the importance of its public members.

Giving an Open and Honest Assessment

The board made a commitment to release the task force’s report to the public. As chair, Crawford knew the report needed to be honest and direct in order to be accepted as valid. The task force delivered a report that was robust and comprehensive, and in some ways even more critical of CFP Board’s processes than The Wall Street Journal article.

Not all board members appreciated the task force’s report at first. But after discussions with Crawford, there was general recognition that for any short-term pain the report might cause to the board and the organization, the long-term benefits it provided were invaluable in rebuilding public trust. The board did not accept all of the recommendations, but the independent task force played a very important role in guiding CFP Board’s work to strengthen the enforcement of its standards.

Identifying the Value and Qualities of a Public Member

Public members introduce a diversity of thought to a board of directors. Their perspectives are distinct from those of industry insiders, and they can bring an objective viewpoint to a board’s discussions. They may recognize conflicts of interest that industry leaders may have become too accustomed to, or raise sticky issues that the profession may not be willing to address. All of this contributes to reducing enterprise risk.

What traits are important in public members? First and foremost, public members need to make sure that all decisions are made in the public’s best interest. Whenever the board discusses items favorable to the industry or profession, public members must view the decision through this lens.

Public members also need to be open-minded, with an openness to dialogue. They must want to learn and be committed to offering their best thinking.

They need a strong sense of self and cannot be easily intimidated. They need to possess a diplomatic patience and persistence, to be prepared to make their points and be as persuasive as possible, yet remain gracious in accepting the ultimate outcome.

Finding the Right Public Members

Recruiting strong public members can be challenging. To address that, CFP Board works with a recruiter to identify public member candidates. A recruiter saves staff and volunteer time and resources, but that is not the only benefit. Public members need a basic understanding of the organization’s purpose and role within the profession. The recruiter helps candidates develop that understanding, so they know what they are getting into.

CFP Board typically has three to four candidates for each open public member position, and the recruitment process runs parallel to the process for recruiting members from the profession. The interview process is extraordinarily important in establishing the dynamics between existing board members and the potential public member. We hold in-person interviews with our short list of nominees. These allow us to gauge comfort level, both for the nominee and for existing board members. A sense of collegiality is important for a board that includes very different people.

A key component to the success of CFP Board’s recent nomination processes — both for public members and others — was identified by the independent task force Crawford led. The task force recommended that CFP Board be more intentional about identifying and filling gaps in the board. The nominating committee now takes time to thoroughly evaluate the board’s composition and the key issues they face, and a detailed position description for open board positions is developed.

CFP Board advertises up front what it is looking for, and then evaluates candidates against those criteria. This year’s position description, for example, specifies the need for a public member with an expertise in competency standards — specifically a CEO or senior executive who has either accomplished reviews of competency standards or run an organization that upholds competency standards and/or credentialing.

With a commitment to recruiting, onboarding and involving public members in the important work of your board of directors, your organization can benefit from a diversity of perspectives, manage key risks, and help ensure that you are serving the best interest of the public.