Fee Only Advisor

NAPFA is the National Association of Personal Financial Advisors.

NAPFA membership consists of financial advisors who provide comprehensive financial planning services on a fee-only basis.

NAPFA member David B. Jacobs serves as a representative for this interview.  David serves on the committee for both the School of Retirement and the School of Risk Management for NAPFA University.

Annuity Digest: Please tell us a bit about NAPFA and how the organization serves financial services consumers.

The Obama Administration is interested in reform that would remove some of the conflicts of interest that exist in the world of financial advice.

Financial planners, however, are concerned that these regulatory proposals which are intended to impose fiduciary obligations on all types of financial advisors may result in overall standards that are less stringent than what currently exists.

Current fiduciary standards apply to an advisory account and largely impact registered investment advisors (RIA).

The Wall Street Journal reports that customers are moving towards independent registered investment advisors (RIA) and away from Wall Street brokerage firms.

RIAs brought in $108 billion in new assets in 2008 while brokerage firms lost $8 billion.

The change is seen in large part as a migration towards more objective financial advice.

A registered investment advisor acts as a fiduciary, offers an advisory account, and is free of many of the potential conflicts of interest that are inherent in a brokerage account.

The Obama administration's proposed financial services regulatory overhaul may have a profound impact on the way that investment advice is disseminated in the United States.

The administration's proposal would impose a fiduciary standard on financial advisors who offer investment advice.

A recent study from Cerulli Associates indicates that registered investment advisors (RIA) are more than hesitant to recommend annuities to their clients.

The report surveys and compares the views of various forms of financial advisors.  Not surprisingly, financial advisors’ product views are tightly related to the financial incentives that support their business models.  Consider, for example, the following: