Creative Planning

Kurta Law is investigating recommendations by Creative Planning representatives.

Creative Planning (SEC #: 801-18564) is a financial planning firm that purports to consider its customers’ long-term financial needs regarding tax planning, risk management, and retirement planning. The firm does not offer ongoing investment management but does offer referrals to outside Registered Investment Advisory firms. These referrals may create conflicts of interest – keep reading to learn more about the firm’s conflicts of interest and fees.

Investors should know that Creative Planning is registered with the Securities and Exchange Commission as a Registered Investment Adviser. RIAs are fiduciaries, meaning they must meet a strict legal standard and exclusively work in their customers’ best interest. Investors who believe their Creative Planning representative recommended a strategy with too much risk may have a case for an investment fraud attorney.

Conflicts of Interest

Creative Planning pays fees to receive referrals from Charles Schwab & Co. as well as the Fidelity Wealth Advisor Solutions Programs. These fees may contribute to a conflict of interest that surfaced in a recent lawsuit.

According to Financial Planning, in 2024, a federal judge dismissed a case against Creative Planning and its founder, Peter Mallouk. The suit alleged unjust enrichment as well as “anticompetitive practices,” referring to the fact that certain firms refer clients to Creative Planning in exchange for a fee. Financial Planning points out that other securities industry members have criticized the fact that Charles Schwab & Co. and Fidelity exclusively refer to RIAs using their custodial services.

Financial Planning Fees  

Creative Planning charges fees based on the total assets in the client’s account. These are separate from transaction fees charged by a brokerage firm, or any fees imposed by investment products like Exchange-Traded Funds (ETFs), mutual funds, annuities, or private investments. Sub-advisors that Creative Planning recommends also charge their own fees.

Retirement Fees

According to Creative Planning’s Brochure, “Fees for the Retirement Plan Services are negotiable, based solely on our discretion, and vary based upon the nature, scope, and frequency of our services as well as the size and complexity of the plan.” See the Brochure for the full fee schedule.

The Brochure also discloses that clients may pay more for retirement planning services through Creative Planning than they would through another service provider.

Regulatory Action Against Creative Planning

On September 18, 2018, the Securities and Exchange Commission announced its decision to settle charges with Creative Planning concerning its alleged dissemination of prohibited client testimonials. The firm’s majority owner, Peter Mallouk, also agreed to settle charges that he caused the firm to violate its code of ethics. According to the SEC, Creative Planning hired a radio station to broadcast advertisements but failed to pre-approve and maintain copies of all of its advertisements. As part of the settlement, the firm agreed to pay a civil penalty of $200,000 and a civil penalty of $50,000.

Lawsuits Involving Creative Planning

Investors considering working with Creative Planning should consider the following lawsuits against the firm.

In September 2023, a client claimed that Creative Planning and Charles Schwab & Co. violated their fiduciary duty with negligent and reckless trading. The client alleged they had suffered financial damage and incurred a substantial tax liability. Allegedly, the firm used his Boeing stock as the underlying asset for a risky options trading strategy. These stocks were allegedly also connected to a margin account. These high-risk strategies allegedly led to a loss of $9.5 million in Boeing stock. The complaint also alleged that Creative Planning Investment Advisors represented that these investments were safe.

Another lawsuit alleged that a Creative Planning representative failed to convert a traditional IRA to a Roth IRA as discussed with the client. The suit alleges that the client made quarterly payments based on a Roth IRA, payments that were unnecessary. The failure to convert the funds also allegedly led to a loss of interest.

How Can Investors Recover Lost Funds from a Registered Investment Advisory Firm?

Cases against investment advisors are typically settled in court, although both parties may agree to use FINRA arbitration instead. FINRA-registered brokerage firms typically require investors to use FINRA arbitration to resolve investor disputes. Investors may choose this route because arbitration is designed to be quicker and cheaper than a civil suit, but investors should also beware that FINRA cannot enforce awards for Registered Investment Advisory firms.  

Kurta Law Can Help

If you have lost money working with a Creative Planning advisor, contact Kurta Law today. Our attorneys provide free case evaluations and do not collect a fee unless we win your case. Call (877) 600-0098 or email info@kurtalawfirm.com.