If you want to become a NAPFA-Registered Financial Advisor, you will now will have to have earned the Certified Financial Planner (CFP®) designation.
The National Association of Personal Financial Advisors (NAPFA) says its decision is the next step in raising the professional status of the industry. Critics say the CFP®
may not be the most appropriate standard bearer for the financial advisor profession.
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NAPFA was founded in 1983 and since its inception, a variety of advisor designations has been accepted as qualification for membership.
The CFP® designation is awarded to professionals across industry business models and holders including registered reps and insurance agents who currently are only held to a suitability standard rather than a fiduciary standard.
NAPFA's decision is intended to set the CFP® apart as the designation that best represents financial planning professional standards.
NAPFA has a history of collaboration with CFP® Board in addressing issues that face the industry, including the fiduciary standard.
The timing of NAPFA's move to publicly support the CFP® designation is propitious. The CFP® Board made news last month after its chairman resigned following accusations he misrepresented the way he was compensated on the FPA's find-a-planner lead-generation website. In addition, as first reported on A4A, CFP® Board Standards of Professional Conduct say a CFP® is a fiduciary only when performing comprehensive financial planning but not when performing "single subject" financial planning.
Ron Rhoades, assistant professor of business at Alfred State College said unless a mandate is established requiring CFP®s to adhere to fiduciary standards at all times, regardless of the service provided, the mark will fail to be recognized by both professionals and consumers as the premier mark of industry professionalism.
Rhoades was slated to serve as the next chairman of NAPFA until it was discovered that he failed to register his firm with the state of Florida in a timely fashion, a paperwork error that made him feel compelled to resign to avoid any appearance of impropriety by a NAPFA chair.
The CFP® Board itself just emerged from a brouhaha involving its chairman, Alan Goldfarb, and two members of the group’s Disciplinary And Ethics Commission. All three resigned amid allegations that they violated the very CFP® Board rules they were supposed to enforce.
Not surprisingly, American College of Financial Services, which certifies advisors with the ChFC, CLU, CASL, LUTCF designations,
criticized NAPFA's embrace of the CFP®
mark, saying that even though NAPFA’s scope is limited, its attempt to support a monopoly on advisor credentials restricts legitimate professional education
and would be a disservice to consumers and to the profession.
Incidentally, the CFA Institute’s Chartered Financial Analysts (CFA) designation is held by over 100,000 professionals across the globe and is considered by some to be a more difficult credential to earn than the CFP® and more valuable to RIAs than the CFP®.
What’s your view? Which credential better represents the fiduciary standard for your industry?
Should NAPFA continue to accept the CFA and other designations without requiring the CFP®?