In a move toward raising the profile of fee-only payment, the National Association of Personal Financial Advisors (NAPFA) has told its members that they cannot possess stakes in monetary services companies that get transaction-based settlement, says a post from Reuters.
In 2004, NAPFA began allowing its members to possess up to 2 percent of a financial services company that accepts commissions from clients. These consultants were still able to call themselves “fee-only”. Nevertheless, there’s some confusion surrounding what constitutes genuinely “fee-only,” especially with the growing interest that customers have in finding financial planners and advisors that work on this basis.
The outcome is that NAPFA has actually chosen that their members must, as part of their subscription, not be associated with commission-based monetary planning at all, including investing in companies that accept commissions. The step, says Reuters, puts NAPFA more in line with the Certified Financial Organizer Barard of Standards, which just recently de-listed about 8,000 planners briefly as part of an effort to stop offering the “fee-only” classification to those associated with business that charge commissions.
It’s also worth noting that NAPFA and the CFP Board of Standards are also wishing to effectively get regulators to need financial organizers and others who provide investment insight to embrace fiduciary requirements. In this manner, clients are secured since the adviser is required by law to put client requirements ahead of advisor commissions.
With the increasing interest in fee-only monetary planning, and issues about openness, this move is likely to be an aid to the financial planning market – at least from a consumer viewpoint.