Clark At Large

Historically, independent advisors have had a hard time bringing themselves to charge enough for financial advice. I think that’s been a large part of the attraction of loaded packaged products: The commission is set by someone else, and you get what you get.

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As usual, Morris Armstrong raises a valid, and very popular, point in his response to my latest posting, which warrants some further exploration.

How can an employee of a broker/dealer [or an independent rep, for that matter] ever be a fiduciary when their income will be coming from another entity? How do you tie in the fact that [some] CFPs will be receiving commissions and yet are being called fiduciaries by the CFP Board of Standards?

These two questions strike at the heart of THE issue that has plagued financial planning since it’s inception in 1969. As much in those early days as today, many planners want to be respected as professionals, yet compensated as salespeople. The legal legerdemain for this is called “the scope of the engagement.”
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Following my last blog posting, “NAPFA’s News,” I received an email asking: “You’re not a fan of NAPFA, are you?” The question gave me pause, and upon reflection, I can see why someone might think that. So I responded that for being on the vanguard of professionalism in financial planning, I’ve been a big fan of NAPFA for many, many years; but, like the Cleveland Browns, Woody Allen, and George W. Bush, they sure don’t make it easy.

Which brings me to the response to my NAPFA blog by Nigel CFP, dated July 16, who wrote in part: “What stuns me Mr. Clark, is that …the press…has spent 25 years helping to promote [NAPFA's] flawed concept of ‘method of compensation’ over education, examination, examination(sic) and most importantly, ethics.”
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