Executive Summary
NAPFA has long been at the front vanguard of the profession, carving a path to advance financial planning forward. And for the most part, it has been incredibly successful. It put fiduciary in the center of the debate, and organizations from the CFP Board to the FPA have adopted fiduciary into their own Codes of Ethics and Practice Standards. It put comprehensive in the center of the debate, and now the CFP Board’s public awareness campaign is anchored around the comprehensive nature of financial planning to pull together all of life’s intricacies. It put fee-only at the center of the debate, and now methods of compensation, conflicts of advice, and objectivity of advice are being evaluated by Congress and government agencies to determine future regulation of the profession. It put the importance of competence at the center of the debate, and now the public media openly acknowledges the value of having the CFP certification as a cornerstone of financial planning knowledge. With so many victories in its core missions, NAPFA had to some extent begun to render itself less relevant, as its successes brought all parts of financial planning closer to its own ideals and diminished its own differentiation. And so at NAPFA National 2011, the organization announced a new branding effort and vision for 2020 – once again, throwing down the gauntlet for leadership of the profession.
The new NAPFA branding message – embodied in its tagline – is simple; what was once “truly comprehensive, strictly fee-only” is now “the power of trust.” This tagline in turn is supported by three missions that NAPFA has set forth: to be the standard bearer of the profession, champion of the public, and the beacon of objective financial advisors.
On the one hand, the new branding messages appear to embody the NAPFA essence quite effectively, yet with language that expands from industry jargon to a broader purpose. In practice, the NAPFA message of fiduciary has long meant “an advisor who can be trusted because s/he puts the client’s interests first” – and accordingly, “the power of trust” would appear to capture the essence of what fiduciary really MEANS to the consumer. Similarly, being “strictly fee-only” has never really been about fees, per se – no client gets excited because you proudly announce that you will charge them fees to work with you! – instead, the message was really about objectivity, advice free from some of the most notorious compensation conflicts of interest. And accordingly, NAPFA’s new mission includes becoming “the beacon of objective financial advisors” – it’s still about being fee-only, but now it’s not about SAYING fee-only, it’s about the objectivity that fee-only is intended to delineate.
Nonetheless, the new brand of NAPFA appears significant to me. Sure, NAPFA has long been pushing to elevate the standards of financial planning, but it has never so overtly and unequivocally declared that it will be the standard bearer for the profession. NAPFA has always been a home for fee-only advisors, but it has never so directly declared that it wants to be a beacon for all who believe in objective financial advice. And if NAPFA continues with the successes it’s had in recent years in advancing fee-only fiduciary financial planning – to the point that a regulatory change actually adopts the standard – we may suddenly find that EVERY financial planner is a fee-only fiduciary eligible for NAPFA membership!
Which paints a troubling picture for the organization that is arguably the current center – the heart – of the financial planning profession: the FPA. As has been noted in several recent media articles, from Bob Veres’ Inside Information to an article by Andy Gluck in Financial Advisor magazine, the Financial Planning Association’s membership has been on the decline in recent years, and although it’s easy to rationalize that as being attributable to the difficult economic environment, most of the other membership associations in the financial advisor world appear to be experiencing much difficulty growing membership. Bob Clark from Investment Advisor magazine points out that perhaps the newer, “smaller” FPA (which is still nearly 10 times the size of NAPFA) is ultimately a positive sign, suggesting that the attrition may have been due to the FPA’s increasingly strong stand for fiduciary that may have alienated some long-standing members who didn’t buy into the new message and direction, but that in the long run the FPA’s positive focus on advancing the profession with attract new members.
Yet it appears that now, the FPA and NAPFA may be on a collision course. Both state that they want to be at the center of the profession – FPA wants to be the Heart of those who support, those who need, and those who deliver financial planning, while NAPFA wants to be the beacon of objective financial advisors and the standard bearer of the profession. Both organizations have embraced the importance of fiduciary, ethics, and competence. In practice, their only material difference in vision has been NAPFA’s perspective that fiduciary objectivity requires being fee-only, while FPA has advocated a compensation-neutral fiduciary position.
So what do you think? Is NAPFA’s new brand and vision still only going to cater to the “fringes” of financial planning? Or is it a more inclusive message and vision that can grow the organization to have a broader impact? Is NAPFA able to make itself the official standard bearer of the financial planning profession? Is the new message a beacon that attracts you to the new NAPFA? Or is FPA going to remain the heart of financial planning? Which provides the best membership value? Which is really in the best position to move the profession forward?
Michael:
Thank you for explaining this, it is news to me and I’m a NAPFA member. I think it was the right thing for NAPFA to do. Also a little competition with the FPA could motivate the FPA to improve. The new branding campaign won’t cater only to the fringes of the profession.
I think NAPFA has to embrace international in a globally aligned economy. That means ‘N’ has to change to ‘I’ or ‘G’.. The coming decade will see more financial planners coming out of Asia..I believe China alone has already over 50,000 CFP members! Over 75,000 CFPs practice outside of U.S.
The young population in Asia are increasingly opting for services from financial planners to reach their financial goals.
Michael excellent post. I like our new slogan as I do with the CFP Board’s new slogan. I am a former member of the FPA and left simply because I felt that too many of our local meetings focused on new and better ways to sell insurance related products, tough for a fee-only advisor like myself to relate to.
The issue of who is leading the financial planning profession is completely and totally irrelevant to me personally. I am a NAPFA member because I feel the organization represents how financial advice should be delivered to clients. The greatest benefit of NAPFA membership to me is the opportunity to interact with my fellow members and gain from their knowledge and insights. If we end up as the leadership organization of the profession that’s great. As a practicing financial advisor I find this whole debate interesting but really unimportant.
Roger,
To me, the reason why direction for NAPFA matters in this context – why it’s relevant to the practicing financial advisor – is because it’s about resources and focus of the organization. Where and how it provides value to members.
NAPFA has done some absolutely amazing things over the years given the size of the organization. But it’s also constrained in what it can do because of its size.
The significance of NAPFA’s “updated” direction is that it has the potential to be a much bigger organization in the future. How would the NAPFA experience change – for the better or the worse? – if 10 years from now, NAPFA as a beacon of objective financial advisors is a 10,000+ member organization instead of “only” 2,000+?
Michael your comment is right on. Would the NAPFA member experience be better or worse if the organization grew to 10,000 members 10 years from now? I think it would be worse, but who knows. As a member since 2003 and a former regional board member the message of growth, growth, growth has always been at the forefront. If there is a fee-only advisor out there let’s sign ’em up.
Growth is fine, as long as there is the infrastructure in place and a plan to manage that growth. That is the challenge for NAPFA leadership. Right now, if growth were to accelerate to 10-20% per year I feel that the quality of the membership experience would suffer.
Michael:
I am a member of the FPA but respect what NAPFA stands for. With that said, even though competition is usually good for all sides, I do believe our field needs to deliver a clear message to the public (and other professions we work with). Otherwise, are we not destined to always be a quasi-profession without a clear vision?
Great post. I am new to the profession and looking into joining the two groups while doing the corse work for the CFP. I know the FPA has various local chapters. Does the NAPFA have local chapters as well or will it look to add local chapters as it grows going forward?
Thank you
NAPFA doesn’t have local chapters, but it does have local study group. You can find them here: http://www.napfa.org/learning/LocalStudyGroups.asp
Why can’t helping clients obtain proper insurance coverage be in their best interest. Is fee-only really superior? 90%+ of my income is from fees, but I do help clients buy certain coverages because I trust myself to get them the right coverage and not sell them rapacious products. I should get paid for that, and I do. Why is the NAPFA guy better than me? Most NAPFA members charge AUM fees – isn’t THAT a conflict of interest? Charging only hourly fees is also a conflict of interest. I would join NAPFA if I wasn’t considered unscrupulous because I collect an occasional commission. I, too, have found FPA to have too much of an insurance focus, so I don’t really fit there either. Final thought: an occasional insurance commission allows me to serve clients at lower asset levels, and still make a profit. Aren’t we trying to help more, not fewer, people?