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Frequently Asked Questions

What does the CPA/PFS designation indicate?
PFS is a specialty credential awarded by the American Institute of Certified Public Accountants (AICPA) to CPAs who specialize in helping individuals plan all aspects of their wealth. Every three years, PFS professionals must complete 60 hours of continuing professional education. PFS applicants study estate planning, retirement planning, investing, insurance, and other areas of personal financial planning. To become a PFS, candidates must be active members of the AICPA, have at least three years of financial planning experience, meet all the requirements for being a CPA, receive professional recommendations, and pass a comprehensive written exam.

What is a “fee-only” planner?
NAPFA defines a fee-only planner as someone who, in all circumstances, is compensated solely by the client, with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. A NAPFA member or affiliate may not receive commissions, rebates, awards, finder’s fees, bonuses, or any form of compensation from others as a result of a client’s implementation of his or her planning recommendations.

Why is fee-only compensation of critical importance?
A financial planner who has a financial stake in the course of action that he or she recommends to a client faces an inherent conflict of interest and cannot be considered objective and unbiased. This is true even if the planner truly believes that he or she has only the best interests of the client at heart. Unfortunately, the vast majority of financial advisors in the United States are sellers of financial products. Some or all of their income may be dependent upon their ability to steer their clients to a limited slice of the thousands of financial products available today. (Putting aside the conflict of interest factor, this limiting of choices in and of itself is often enough to impact the quality of the investment advice.) These advisors include stockbrokers, analysts, insurance agents, accountants, and attorneys, as well as financial planners. Many of their clients are not aware of their advisors’ dependence on selling products, or else they do not recognize its significance. NAPFA believes that many of the problems that beset Americans today in their financial affairs – including the mismanagement of debt, failure to protect retirement assets, and poor allocation of savings and investments – relate directly to the conflicts of interest that pervade the marketplace.

What is NAPFA?
NAPFA, the National Association of Personal Financial Advisors, is an organization through which fee-only financial planners can further enhance their professional skills, market their services and become part of a collective, influential voice on matters that affect them and their clients. Founded in 1983, NAPFA currently has more than 2,400 members nationwide.

What is the significance of the term, “NAPFA-Registered Financial Advisor?”
It indicates that a financial planner adheres to the industry’s most demanding practice requirements, including fee-only compensation, and meets NAPFA’s rigorous standards. We believe that, through our NAPFA-Registered Financial Advisor program, we have created the financial planning industry’s clearest message about the level of responsibility and care that must be exercised on behalf of each client.

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