The Advantage of Selecting a Comprehensive Fee-Only Financial Advisor

What does “Fee-Only” mean?
This term refers to the method of compensation for the financial planner. “Fee-Only” planners are compensated solely by fees paid by their clients and do not accept commissions or compensation from any other source. The National Association of Personal Financial Advisors (NAPFA) is the largest organization of “Fee-Only” planners. “Fee-Only” planners believe there is a significant “conflict of interest” if an advisor stands to gain financially from the purchase of any product he or she recommends to the client.

What other forms of compensation are used by financial planners?
Some planners are compensated entirely by commissions from the providers of products recommended and sold. Others, referred to as “Fee-based” or Fee-offset”, charge both a fee and receive commissions from selling products. NAPFA Registered Financial Advisors use neither method.

What is comprehensive financial planning?
Comprehensive financial planning focuses on all areas of the client’s financial situation and develops a course of action to help the client achieve personal goals. A comprehensive plan includes:

• Analyzing the client’s existing situation  
• Defining the client’s goals. 
• Creating a plan that considers all the financial aspects of the client’s objectives. 
•  Assisting the client in implementing the recommendations. 
•  Periodically reviewing and revising the plan to adjust to changes in the financial environment and the client’s goals.

What areas are covered in a comprehensive plan?
A comprehensive plan includes analysis and recommendations in appropriate areas including Investment Portfolio, Cash Flow Management, Income Tax Management, Estate Planning, Risk Management, Retirement Planning, Education Funding, Business Planning, Employee Benefits Planning and Other Specific Client Needs.

Why is it important to get a comprehensive review of all facets of your finances?
Because in this day and age you cannot evaluate your investments or income without considering the impact of taxes or inflation. You must consider cash flow and monitor expenses. All aspects of your financial picture are interrelated and you must consider how each individual decision fits into the overall plan.

What financial planners are best qualified to develop such a comprehensive plan?
All NAPFA Registered Financial Advisors are professionally qualified. To obtain this designation, they have demonstrated their ability to provide sophisticated, comprehensive financial planning. Specific requirements include:

• Compliance with federal and state investment advisor regulations
• Advanced education in the field or other related credentials
• Significant professional experience
• Peer review of a comprehensive plan
• Extensive continuing education

Does the planner have any fiduciary responsibility?
NAPFA Registered Financial Advisors have a fiduciary duty to their clients. The client’s best interests must be placed before the advisor’s.
Endorsement of NAPFA has been received from the AARP, the consumer Federation of America and state regulators. Several financial publications have also recognized the value of “Fee-Only” financial planning.

What do recognized publications have to say about the value of “fee-only” financial planning?

NEWSWEEK – Jane Bryant Quinn
“Financial Planners who take commissions have a built-in conflict of interest . . . even with disclosure, my choice would be a Fee-Only planner.”

MONEY MAGAZINE
“Start with the general practitioner. . . a Financial Planner(whose) compensation should be from fees alone.”

FORBES
“The most important matter is how the planner is compensated. Hire the planner who . . . has no financial stake in (your) investment.”

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