SALT LAKE CITY -- Some NAPFA members are in a fee-only double bind.

All NAPFA members must be fee-only and have a CFP certification. Yet CFP Board rules say certain planners can't call themselves fee-only because they are affiliated with entities -- such as financial services firms in which they own minority stakes -- that take commission income.

The issue remains unresolved. Even the number of planners affected is unknown, although NAPFA Chief Executive Geoffrey Brown estimated that the issue may be relevant to about 125 of NAPFA's 2,500 members.

But in a brief interview at NAPFA's national conference, CFP Board Chief Executive Kevin Keller said the board handles those cases on a one-by-one basis.

"If anybody has a question about their particular situation, we are happy to provide guidance for them at CFP Board," Keller said. "We've had a number of questions for guidance on compensation issues."

Still, Keller said he could not answer general questions about what all those advisors should do to resolve the conflict -- given that the board is facing a lawsuit over its fee-only compensation rules.


To address the issue, NAPFA convened a working group in late winter, said Brown, who added via email that he expects deliberations to conclude "very soon."

And, he said, no NAPFA members have resigned yet over the issue.

"NAPFA has advised members to seek clarification about their specific circumstance from their designating body," Brown wrote in an email. "These members are not in conflict with NAPFA and may not be so with CFP Board."

Currently NAPFA allows its members to own up to 2% stakes in other financial services firms, including those that take commissions such as broker-dealers or banks, the provision at the core of the double-bind conflict.

"We looked at 2% as a very insubstantial stake. The actual NAPFA member is still only engaged in financial planning," Brown said last year.

While CFP Board rules state that CFP holders may not call themselves fee-only if their employers or any other "related parties" receive commission income, Brown said the "2% exception and related party issues require more than a surface review to be judged accurately. There are specific circumstances, that upon more detailed review, may not be in conflict with the CFP Board's outlook on the situation."

"Even though these members may have been admitted under the 2% exception, they still serve the public with fiduciary accountability and transparency, which are founding principles of NAPFA," Brown added, despite the fact that this characterization directly contradicts the CFP Board's own rules and clarifications.

Read more:

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access