CFP Board & NAPFA Split on ‘Fee-Only’ Definition

Two of the most influential organizations in the world of independent planners, the CFP Board and NAPFA, do not agree on the definition of one of the most hot-button terms in the profession: fee-only.

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Comments (10)
A wonderful article and I would tend to disagree with any assertion that having multiple definitions of the term fee only would not confuse a public. Keep in mind that this is the same public which is confused over a broker and RIA.
What does jump out though is when Mohrman Gillis referred it its "planner members" and that may be the first time that I have ever heard anyone from the CFPBOS refer to the certificants as members. In the past, from Bob Goss onward, they emphasised that CFPs were licensees, not members. Perhaps we are seeing another definition shift!
Posted by Consumer A | Tuesday, August 20 2013 at 1:27PM ET
This is hilarious! It"s like watching The Three Stooges. I couldn't come up with a better storyline if I tried. Ann Marsh, you are sitting on gold! Mine it for all it's worth.
Posted by Scott M | Tuesday, August 20 2013 at 2:19PM ET
Good catch, "Consumer A." That was actually an error on our part; Mohrman Gillis didn't use the word "members." We've fixed the story to reflect that. Thanks much -- Rachel Elson, executive editor
Posted by Rachel E | Tuesday, August 20 2013 at 2:54PM ET
I came into financial planning after 20+ years of being a lawyer. I think this whole issue is simply inane. The bottom line is we owe our clients a fiduciary duty, people who argue about that should disclose that in big block letters "WE DO NOT OWE OUR CLIENTS A FIDUCIARY DUTY TO PROTECT THEIR FINANCIAL ASSETS". Whether you are fee only or a combination is irrelevant. I am 95% fee only but some financial products are not yet RIA friendly. The same is true for insurance policies. That doesn't mean it is an unsolvable conflict, it just means you have to explain it to your client and have them discuss that purchase with their lawyer or CPA as a second opinion. This industry reminds me of "Gulliver's Travels" where we spend too much time arguing about which side to crack an egg but ignoring the bigger issues. The solution should be making the CFP designation more of a professional certification, open only to lawyers, CPAs or other individuals approved by a regulatory agency. That will do more to clean out the industry than trying to define what "fee only" means.
Posted by Michael H | Wednesday, August 21 2013 at 9:51AM ET
I agree with Michael H above. This is hilarious. As Allan Roth says, 'any time money changes hands there is the potential for conflicts of interest.' Compensation model does not make someone ethical. And every model has its advantages and disadvantages. I start with planning, but often the client will purchase insurance and move their assets over to be managed (AUM). Fee-only is not the holy grail of financial planning, nor does it eliminate conflicts of interest (insert disgraced past NAPFA presidents here). Stop pretending fee-only is holier than all other comp models. Instead let's focus our efforts on consumer-friendly disclosure of compensation. That's what's sorely lacking.
Posted by Thomas D | Wednesday, August 21 2013 at 10:30AM ET
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