A Columbia, Md., man and Certified Financial Planner was publicly admonished for his involvement in a variable annuities case, according to the CFP Board, which administers the certification.

James R. Klima was issued a letter of admonishment in December 2007, but appealed the ruling.

He was investigated by the CFP Board after a customer complaint regarding his alleged failure to notify in a timely manner the issuer of a variable annuity that his client had disclaimed her interest as beneficiary of the variable annuity and was, therefore, not entitled to receive the proceeds of the variable annuity upon her husband’s death.

Following a hearing, CFP Board’s Disciplinary and Ethics Commission made several findings, including that Klima acknowledged he could have annuitized the existing annuity, which would have been a less costly approach for the client than purchasing a new annuity for each of the client’s children and would have avoided the early withdrawal penalties and taxable income suffered by the adult children. He also was found to have failed to disclose the civil suit with the client on his CFP Certification Renewal Application, as is required.

The commission found Klima’s conduct in violation of Rules 201, 202, 607, 703 and 606(b) of CFP Board’s Code of Ethics and Professional Responsibility.

The commission said there needs to be more willingness on Klima’s part to disengage with his client when issues are beyond his level of expertise. The commission also expressed concern about what appeared to be a narrow focus in recommending annuities as a solution, stating its belief that Klima potentially sacrificed consideration of alternatives that could have been more beneficial to the clients.

In addition to the admonishment, Klima must complete 12 hours of additional continuing education in the next year, in including four hours each in the areas of estate planning, investments and estate distribution.