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January 22, 2004 at 07:00 PM
There Are True Fee-Only Planners
To The Editor:
In a column in the Dec. 22/29 issue of National Underwriter, Jack Bobo criticizes “fee-only [financial] planners who do not disclose that they have ties to the companies that sell the products they recommend.” His comments are accurate to some degree, but they might create the impression that a consumer has nowhere to turn when seeking a fee-only financial planner who is truly unbiased and objective.
However, there is a well-known trade association of financial advisors that truly upholds the fee-only ideal. It is called NAPFA, the National Association of Personal Financial Advisors, and our well-earned reputation for comprehensive and honest financial guidance is drawing greater attention each year as consumers become aware of the many conflicts of interest that bedevil the financial services industry.
For more than 20 years NAPFAs members have adhered to the industrys strictest rules of conduct, as embodied by our Fiduciary Oath: “The advisor does not receive a fee or other compensation from another party based on the referral of a client or the clients business.”
The Fiduciary Oath only is one example of a NAPFA members public commitment to putting the clients needs first in all recommendations. We also require full disclosure of all compensation and potential conflicts of interest prior to engagement with a client, even if the client does not ask for the information. And, we have been leaders in demanding greater disclosure by mutual fund companies, brokerage firms and, yes, insurance companies about how their sales people are compensated.
With the baby boomers looking ahead to their retirement, the issue of fair and honest financial advice has never been more visible in the United States. I appreciate Mr. Bobos observations that the financial planning profession needs to treat people with integrity and respect; I want Mr. Bobo and the readers of National Underwriter to understand that NAPFA is one organization thats already doing something about it.
