NAPFA Advisor

What Is NAPFA and Why Should I Choose A NAPFA Advisor?

What is NAPFA?

NAPFA, the National Association of Personal Financial Advisors, is an organization through which fee-only financial planners can further enhance their professional skills, market their services, and become part of a collective, influential voice on matters that affect them and their clients. Founded in 1983, NAPFA currently has more than 2,400 members nationwide, all of whom are fiduciary advisors.

Why Should I Choose a NAPFA Advisor?

NAPFA-registered financial advisor is a fee-only financial planner that adheres to the industry’s most demanding practice requirements, including fee-only compensation and a commitment to a comprehensive, holistic approach to financial planning. NAPFA advisors must prove competence in financial planning matters and provide a high level of care and responsibility to each client.

What is a Fee-Only Financial Planner?

fee-only financial planner is compensated solely by the client and receives no compensation that is contingent on the purchase or sale of a financial product. A NAPFA advisor or affiliate may not receive commissions, rebates, finder’s fees, bonuses, or any form of compensation from others as a result of a client’s implementation of the individual’s planning recommendations. Fee-only financial advice is important because a financial planner who has a financial stake in the course of action that he/she recommends to a client faces an inherent conflict of interest and cannot be considered objective and unbiased.

What is the fiduciary oath taken by NAPFA Advisors?

The fiduciary oath taken by NAPFA-registered personal financial advisors means the advisor shall exercise his/her best efforts to act in good faith and in the best interests of the client. The advisor shall provide written disclosure to the client prior to the engagement of the advisor, and thereafter throughout the term of the engagement, of any conflicts of interest, which will or reasonably may compromise the impartiality or independence of the advisor. The NAPFA fee-only financial planner, or any part in which the advisor has a financial interest, shall not receive any compensation or other remuneration that is contingent on any client’s purchase or sale of a financial product. The NAPFA fee-only planner does not receive a fee or other compensation from another party based on the referral of a client or the client’s business.

How does NAPFA ensure NAPFA advisors’ competence in providing fee-only financial advice?

Currently, the field of financial planning has numerous certification programs that show that a person has been trained in certain relevant subject areas, but it does not yet have a broadly accepted definition of superior quality. NAPFA is doing its part to ensure those professionals calling themselves NAPFA-registered financial advisors are meeting high competence levels. In fact, NAPFA’s requirements exceed those of any other financial industry association.

 

Along with requiring one of the basic educational certifications, NAPFA-registered personal financial advisors must submit a financial plan for peer review and complete continuing education in six subject areas every two years. Additionally, the advisor’s government-mandated disclosure document (Form ADV) must be reviewed annually. Also, NAPFA advisors must sign and abide by the NAPFA Fiduciary Oath, a commitment to working solely in the client’s best interest at all times.

 

NAPFA developed the fiduciary oath as a service to consumers and has made it available to the public for use with any financial planner whether or not the planner is a NAPFA-registered personal financial advisor.

What is a holistic approach to financial planning and how do NAPFA advisors provide holistic fee-only financial advice?

NAPFA-registered personal financial advisors must not only provide fee-only financial planning advice, but also holistic financial planning services to those they serve. This means that rather than focusing on investments in general and stocks in particular — a trend encouraged and reinforced by the fact that most providers of financial advice benefit from the sale of financial products — NAPFA advisors must focus on all factors that comprise the investor’s unique financial situation.

If a financial planner doesn’t understand the client’s full picture, the quality of advice in any one area, including investment advice, can suffer significantly. Competent and informed investment decisions must take into account all the other factors that comprise an investor’s financial profile, including tax, estate planning, insurance, risk tolerance, specific family circumstances, and ultimate financial goals. A financial plan built holistically includes much more than investment advice. It is an all-purpose tool that enables the financial planner and client, working together, to make better financial decisions because each individual decision is made within the context of the full picture.

NAPFA-registered personal financial advisors practice truly holistic financial planning to ensure their clients’ entire financial picture is taken into account.

What is NAPFA's ultimate goal?

For too long, many Americans have relied on financial advisors who had improper motivations or a limited view of their responsibilities to their clients. NAPFA has pioneered a set of standards of advisor education, training, and methods of practice that truly serves the public interest, emphasizing objectivity, holistic planning, and broad training and experience. NAPFA’s goal for its fee-only personal financial advisor members is to set the bar high and make these standards commonplace in the practice of financial planning.
 
If you’re trying to select a financial planner that abides by NAPFA’s rigorous standards of fee-only financial advice and holistic financial planning, you’ve come to the right place. We are NAPFA-registered personal financial advisors with offices in Boston and Cape Cod, Massachusetts and we’d be happy to work with you.


Contact us for a free, no-obligation initial consultation.