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Hubbub over fiduciary standard underscores growing clout of NAPFA

Planning group went against grain, backed universal standard of care early on; membership way up

Leaders of the fee-only planner group the National Association of Personal Financial Advisors are crowing — just a bit — about how the debate over fiduciary duty has gone their way.
NAPFA was one of the first groups to raise the importance of a fiduciary duty for financial advisers, said Ellen Turf, its chief executive.
“We were told years ago — including [by] some on our board — don’t bother” pushing for a fiduciary standard, Ms. Turf said.
“But now we’ve got all the regulators looking [at requiring] a fiduciary standard,” said Lesley Brey, founder of L.J. Brey Inc. and a NAPFA board member.
NAPFA, together with the Certified Financial Planner Board of Standards Inc. and the Financial Planning Association, have been outspoken in lobbying for a universal standard of care.
The NAPFA officials spoke with InvestmentNews this week during the group’s inaugural practice-management and investment conference in San Diego, which concludes today.
Ms. Turf said she has no idea if the Securities and Exchange Commission will use its mandate under Dodd-Frank to impose a fiduciary standard on anyone giving personal investment advice.
Regardless of the outcome, NAPFA itself seems well-positioned. The industry association has tripled its membership from five years ago to 2,300 members, Ms. Turf said.
Many new members are career switchers, a trend that looks likely to continue, she said. And the group benefits from the market share gains enjoyed by independent advisory firms.
NAPFA offers an educational track, called Practice Foundations, that offers newer advisers basic training on how to run a fee-based practice, which is also helping to attract new members, Ms. Turf said.
“A lot of commission people have no idea how to run a fee-based business,” Ms. Brey noted.
NAPFA’s growth comes despite the perception among some that its members are an elitist group of planners who struggle to make a living.
NAPFA leaders disagree with that depiction.
Many of its members run some of the top advisory practices in the nation, they said. In fact, a panel of billion-dollar advisers at the conference shared ideas on building their practices.
The group has made its major hurdle for membership — the submission of a detailed financial plan — more flexible as well.
But commission-based advisers still can’t join NAPFA. It’s not that NAPFA members see themselves as superior, Ms. Brey said.
“I would argue that we’re trying to remove potential conflicts of interest” in the industry, she said.