The National Association of Personal Financial Advisors is drawing a sharper line between truly conflict-free advice and the broader industry with a newly formalized fiduciary standard.
Setting out five binding duties that define what it means to serve clients as a fee-only, commission-free financial advisor, NAPFA's Fiduciary Standard applies to all NAPFA-Registered Financial Advisors and is grounded in five core duties: care, loyalty, compensation, competence, and engagement.
According to a Monday statement from the association, registered advisors under the framework will commit to acting as fiduciaries at all times – not only during discrete transactions – and to operating exclusively on a fee-only basis, with no commissions, product sales, referral incentives, or any form of third-party compensation.
"The word fiduciary is used often, but what it means in practice is not always clear," said Kathryn Dattomo, chief executive officer of NAPFA. "NAPFA-Registered Financial Advisors commit to putting clients first in every recommendation and relationship."
Under the new standard's duty of compensation, NAPFA-Registered Financial Advisors and their firms must ensure that all compensation is transparent, reasonable, and free from conflicts of interest. They may not accept commissions for the sale of any financial products, enter into revenue-sharing arrangements, or accept referral fees. All fees, including when and how they may change, must be disclosed to clients in writing before the engagement begins.
In addition, advisors must hold the CFP® certification and complete 60 hours of continuing education every two years. NAPFA members and their firms also undergo periodic disclosure reviews to verify ongoing adherence to fee-only principles.
"Excellence in financial advice requires transparency, aligned interests, and a deep commitment to rigorous, comprehensive planning," said Natalie Pine, NAPFA Board Chair. "This framework sets a higher standard by clearly defining a fee-only fiduciary model that is free from commissions, sales incentives, and conflicts."
The new framework is grounded in three existing bodies of fiduciary law: the fiduciary duty under the Investment Advisers Act of 1940, which governs registered investment advisors; the ERISA standard for employer-sponsored retirement plans; and the CFP Board's Code of Ethics and Standards of Conduct.
According to the Investment Adviser Industry Snapshot 2026 report, asset-based fees remain the dominant compensation model: 95.5% of SEC-registered investment advisors offered a fee based on a percentage of client assets under management in 2025.
But pure AUM-only billing is far less common than that headline number suggests. Only 17.5% of advisors were compensated through asset-based fees alone. The majority — 78.0% of advisors in 2025 – offered asset-based fees alongside other fee types, including fixed fees, hourly fees, or performance-based fees.
The most common arrangement in 2025 was an asset-based fee combined with fixed and/or hourly fees, used by 35.0% of advisors. This structure is particularly prevalent among firms offering financial planning services: approximately 49.8% of all advisors – and nearly 85% of advisors providing financial planning – offered either a fixed fee or an hourly fee, or both.
Commissions, by contrast, are a marginal and declining feature of the RIA landscape. Just 1.9% of SEC-registered advisors offered commissions as a fee option in 2025, down sharply from levels recorded 25 years earlier; the IAA data show commission use has fallen by 10.1 percentage points since 2000.
While the IAA data show a diversity of fee models across the RIA space, NAPFA is requiring its advisors to be compensated solely by the client, with no compensation contingent on the purchase or sale of a financial product, and no revenue received from any third party.
That rules out performance fees for most planning work, revenue-sharing arrangements, and commissions outright, which means advisors operating within a hybrid RIA platform would automatically be disqualified from NAPFA membership.
The newly formulated NAPFA standard also requires its registered members to hold the CFP mark, completing at least 60 hours of continuing education every two years.
Under CFP Board's baseline requirements, CFP professionals currently must complete 30 hours of continuing education every two-year reporting period, including a 2-hour pre-approved CFP Board Ethics course and 28 hours of general CE covering one or more of CFP Board's Principal Knowledge Topics. For renewal cycles beginning during or after Q1 2027, CFP professionals will be required to complete 40 hours of CE every two years.
"We are committed to transparent guidance and long-term financial well-being because putting our clients' needs first is simply the right thing to do," Pine said.
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