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Financial Planning “Profession” at Crossroads


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    Establishing the Fiduciary Standard

    We love what we do.  We help people solve financial and personal challenges all day long.  It’s very gratifying work to help clients through all the transitions in their life and make smart decisions with their money for themselves and their family.  The National Association of Personal Financial Advisors (NAPFA) was very influential in helping us organize as a fiduciary practice twenty-two years ago when the fee-only business model was in its infancy.  For those who don’t know, fee-only means that we cannot earn commissions on the sale of financial products like insurance or annuities. We are very grateful to NAPFA and its wonderful members who helped us in those early years and pointed us in the right direction.

    Getting off track?

    However, about ten years ago NAPFA started getting off track.  They aligned themselves with the Financial Planning Association and the CFP Board to form the Financial Planning Coalition.  NAPFA adopted the CFP mark as a requirement for membership.  But, what they didn’t fully take into account was that CFP’s CAN earn commissions from the sale of financial products AND can charge advisory fees.  The advisor can choose how they want to be paid.  This is known as fee-based planning.  It’s different than fee-only model as there are inherent conflicts of interest.  Fee-based advisors work for a company whereas fee-only advisors MUST work in the best interests of their client by law.  As many as 80% of CFP’s work under a fee-based methodology.  The decision structurally changed NAPFA and NOT for the better.

    So, NAPFA’s constituency works as fiduciaries while all others in the two other groups don’t necessarily.  Why did NAPFA then align themselves with the FPA and CFP Board if they serve different constituencies?  I’m guessing they thought they could elicit policy in Washington DC together better than separately.  But, they served different types of advisors!  Yes, and, as a result, NAPFA lost it’s voice as the beacon of fee-only financial planning advice.  We no longer get calls from potential clients who say they read about NAPFA/fee-only planning.  We no longer read about NAPFA promoting the fiduciary model.  And to make matters worse, the XY Planning network, a for-profit organization, now does the marketing and new advisor training for NAPFA advisors leading to a further erosion of the NAPFA brand.

    NAPFA now shuts down opposing views on the direction the organization is moving.  No longer are there spirited debates at conference membership meetings.  Instead, there are scripted member briefings with no chance for interaction.  No longer can you question NAPFA leadership, or they remove you from the organization forum.  Now the emphasis is on diversity, equity, and inclusion at the expense of all else.  Sounds a little like what is going on nationally doesn’t it?  Silence those who have different views and quietly control the narrative.

    The FPA is leaving

    The Financial Planning Association has just announced that they are leaving the Financial Planning Coalition to focus on legally protecting “financial planners” as a title for their members.  FPA membership numbers have dropped from 30,000 back in 2000 to only 18,000 today so we surmise they had to do something to save the organization. 

    a road sign image to represent Financial Planning “Profession” at Crossroads

    So where does that leave NAPFA? 

    Right back at the beginning!  They have lost twelve years of promoting the fiduciary standard and it’s members.  They have lost significant ground in being the go to organization for objective fee-only planning.  NAPFA’s brand has been reduced to rubble trying to play in the same sandbox with others despite their structural and cultural differences.  So, now what?  It’s time for LEADERSHIP, true leadership, or else NAPFA will be lost forever.  We need leaders who are reminiscent of its founding fathers and people who understand the power of the faded brand.  Despite NAPFA’s failures, you can be assured that we will stay true to our values as fee-only fiduciary planners – always working in the best interests of our clients and providing the leadership that investors and those seeking advice so desperately need.

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