NAPFA's New Mark Challenges Planning Establishment

It looks like another moniker has been added to the financial advisor community to go along with designations such as CFP, PFS and ChFC.

The National Association of Personal Financial Advisors (NAPFA), the organization known for its advocacy of fee-only financial planning, recently announced it has adopted the term "NAPFA-Registered Advisor" for its full members.

The organization is seeking a trademark of the title and is encouraging members to immediately begin using it in their marketing materials.

NAPFA officials say they view the designation as a way for NAPFA members to stand out. Two years ago, NAPFA flirted with the notion of creating a "board certified" designation, partly to elevate the stature of its members. The move was seen as controversial, and NAPFA shelved plans to proceed with it.

The organization has about 800 members, most of whom are full members. "All too often, when prospective clients are looking for a financial advisor, they get overwhelmed with affiliations and designations and certifications," says former NAPFA Chairman Gary Schatsky. "We are trying to cut through some of that confusion and to identify those advisors who truly have separated themselves from the pack through their training, fiduciary commitment, fee-only compensation and comprehensive services."

The name is part of an ongoing effort by NAPFA to broaden its "fee-only" image and place more emphasis on its dedication to advisors' fiduciary responsibilities. As many advisors have moved to a fee-only or "fee-mostly" practice structure in the last decade, NAPFA has seen its uniqueness diminish.

NAPFA Chairman Steven P. Kanaly, who has led the image effort since taking the organization's reins from Schatsky a year ago, says the new designation is a key part of that work. "This program will be the centerpiece this year and in the years ahead to reach out to consumers and the financial services industry," Kanaly says.

Some advisors are skeptical, however, and feel consumers already are confused by the variety of designations and certifications advisors attach to their names. NAPFA's move also flies in the face of efforts by the Certified Financial Planner (CFP) Board of Standards to bring greater unity to the myriad of designations.

Rick Adkins, chairman-elect of the CFP Board, says he views the new NAFPA title as more of a marketing tool than a meaningful professional credential. "They don't have the staff, resources and expertise to manage a certification program," he says. "I don't think anyone really knows what the designation means. I'm not sure the people at NAPFA know, either."

Some likened the NAPFA title to an attempt by the former International Association for Financial Planning (IAFP) to create a registry of elite financial planners in the 1980s. The project eventually collapsed because the organization wasn't equipped to act as certification authority, says Harold Evensky, an advisor who was involved in the project.

Evensky says NAPFA could be making the same mistake. "In terms of financial planning, in terms of reality, there is a single designation-that's the CFP," says Evensky, principal of Evensky, Brown & Katz in Coral Gables, Fla. "That is the global designation, despite what others would like to think."

That's not how some NAPFA leaders see it. NAPFA and the CFP Board, in fact, have been at odds on a number of issues over the years. Kanaly, for example, recently criticized the board for not being strict enough in proposed revisions to advisor-compensation disclosure rules. On that point, some longtime CFP Board backers like Evensky, a former CFP Board chairman, agree with NAPFA.

The fact that the CFP Board sanctions commission-based compensation continues to divide the two organizations, as does the suggestion that NAPFA is too small to be significant.

Schatsky bluntly argues that NAPFA's standards-under which 30% to 40% of applicants are deemed ineligible-are higher than the CFP Board's. However, supporters of the CFP mark counter that it's routine for more than 40% of CFP-license seekers to fail the exam.

"The differences speak for themselves," Schatsky says. "They don't have the continuing-education breadth. They don't have a financial plan reviews by peers. They don't have the same definitions of fee-only. They don't have the requirement of being comprehensive."

TD Waterhouse Inks Deal With Advent

TD Waterhouse is offering its advisor clients the ability to use Advent software-in more ways than one.

The brokerage and custodial-service provider announced a deal in which its 2,000 advisors will be able to use Advent's portfolio-management software as either a stand-alone product running on advisors' in-house servers or through TD Waterhouse's proprietary Veo online platform. Advisors who decide to use the integrated version of the software will also be free to switch to Advent's stand-alone products.

The deal is the second venture with a major software company that Waterhouse has signed this year. In February, it announced an agreement to make Financial Engines' retirement and risk-management software available to advisors.

"Investment advisors desire a choice when it comes to services for managing their client portfolios and their businesses," says J. Thomas Bradley Jr., president of TD Waterhouse Institutional Services. The flexibility of two options gives advisors "the freedom to keep their business with TD Waterhouse because they are truly pleased with our service, not because they are tied to us through software."

The announcement comes at a time when Advent is embroiled in litigation with TD Waterhouse's chief competitor, Charles Schwab.

Schwab won a preliminary injunction against Advent in January that requires the software company to continue to support a download interface with Schwab.

Advent had been attempting to migrate its users to a proprietary interface called Advent Custodial Data (ACD) service-which allows advisors to download data from multiple custodians through Advent's servers. The preliminary injunction by a California Superior Court judge also prohibited Advent from interfering with Schwab's efforts to create its own download interface.

TD Waterhouse's moves appear designed to offer advisors more choices and assuage mounting concerns that their client data could be held captive by a software concern or custodial service provider.

Advisors Need To Reach Young Adults And African-Americans

Americans seem to be taking financial planning more seriously after the tumultuous events of the past year, according to a new survey.

The joint survey by the Financial Planning Association (FPA) and the Consumer Federation of America (CFA) found that 55% of Americans consider financial planning to be more important to them now than a year ago.

Financial advisors are noticing the change, according to the FPA.

In a separate survey of 100 members, the FPA found that 60% feel their clients are more worried about their financial futures than a year ago. Thirty-five percent of surveyed advisors also say more of their clients are adjusting their financial plans.

"Our survey reinforces earlier research that September 11 has made Americans more, not less, financially prudent," says CFA Executive Director Stephen Brobeck.

The survey, conducted by Opinion Research Corporation International, consisted of interviews of 1,007 Americans between March 7 and 10. The margin of error was plus or minus 3%.

Among the other findings:

Moderate-income households, with incomes between $35,000 to $50,000, are most likely to express a heightened concern for financial planning. Of that group, 73% say they consider financial planning to be very important, compared with 65% of everyone surveyed. Nearly everyone, 92%, say they consider financial planning to be important.

Seventy-seven percent of African-Americans say they feel financial planning is very important.

The demographic groups most likely to feel financial planning is more important now than a year ago are adults between ages 18 and 34, 61%, and African-Americans, 72%.

The terrorist attacks of September 11 have played a role in the way people view their finances. Fifty-three percent of Americans believe that, as a result of the attacks, it is more important to have a financial plan, compared with 17% who say it is less important.

The survey results underline the trend that financial planners find themselves having a greater role in people's lives, says FPA President Bob Barry.

"The role of financial planners in our society is becoming increasingly important," Barry says. "It is especially critical for us to reach out to young adults and African-Americans."

The FPA is trying to address the need by doing pro bono work through the CFA's America Saves project, Barry says.

J.P. Morgan Chase Donates $230,000 To WTC Relief Effort

The Financial Planning Association's efforts to help people impacted by the September11 attacks have been given a $230,000 boost by J.P. Morgan Chase & Co.

The donation by J.P. Morgan Chase-part of a $10 million pledge to a variety of charities the company made shortly after the attacks-will help the FPA to expand programs it began shortly after September 11.

Among the initiatives by the FPA was the creation of a national support center. Victims who call the center at (800) 647-6340 are referred to FPA members who have volunteered to offer their services free of charge. The FPA has placed full-page advertisements in some of the nation's largest newspapers to publicize the service.

The J.P. Morgan donation-which is targeted toward the FPA's New York victim assistance efforts- has led to the hiring of Clara Lipson as the center's program director, says FPA spokeswoman Heather Almand. One of Lipson's missions will be to work with other relief agencies to reach out to victims, she says. Lipson has about 15 years experience working in the financial services industry and with nonprofit groups.

The J.P. Morgan donation will be used to develop a consumer-focused financial education Web site and a series of seminars in the New York metropolitan area, Almand says.

The seminars will be focused on serving communities where people affected by the September 11 attacks reside, including those people who lost family members, were disabled or lost jobs or businesses as a result of the attacks.The FPA also is planning seminars for Washington, D.C., and affected areas of Pennsylvania.

The seminars "will provide the opportunity for financial planners to meet face-to-face with those affected and make the discussion a more meaningful and personal experience," says Clare Stentstrom, chairperson of the FPA New York chapter.

Since the FPA opened up the support center on October 8, about 200 phone calls have been received, mostly from people who lost loved ones in the World Trade Center attacks, Almand says.

They often need someone to help them sort a number of issues, including insurance and estate settlements, and making sure they are collecting all the funds to which they're entitled, she says.

"They don't even know where to start," Almand says. The FPA has about 400 volunteer advisors in the New York metropolitan area, as well as 100 in the Washington, D.C., area, she adds.

The FPA will continue to run the victim-support programs as long as they're needed, Almand says. "Our relief effort in New York is going to go on indefinitely, she says.

The J.P. Morgan Chase grant to the FPA was among 26 grants, totaling $6.5 million, that represent the first round of $10 million in donations planned by the company.

Research Firm Sees $2.7 Trillion In Managed Accounts By 2011

The managed-accounts industry may experience continued growth over the next decade, according to Financial Research Corp. (FRC).

In a forecast released last month, the research company says it expects assets held in managed accounts to grow from $415 billion at the end of 2001 to $2.7 trillion by 2011. "Our projections, in general, portray an extremely dynamic industry poised to attract increasingly strong asset flows, as well as even greater sales support from individual advisors associated with firms offering managed-account programs," says FRC President T. Neil Bathon.

The report predicts the industry's assets under management will rise to $969 billion in 2005 and $1.7 trillion in 2008. New asset flows into managed accounts will increase from $103.7 billion in 2002, to $231.9 billion in 2005, $366 billion in 2008 and $469.4 billion in 2011.

Individual accounts could grow from 1.6 million this year to 4.2 million in 2005, 7.9 million in 2008 and 12.4 million in 2011, according to Financial Research.

The forecast also predicts an increase in the amount of assets in tax-exempt vehicles, from 35% today to 40% in 2011. Financial Research says the forecast was derived "through analysis of account-trend information provided by the industry's leading program sponsors and asset-management firms."

"The growth forecast documents an already well-established trend toward advisor-supported investment vehicles," says Bathon. "As the decade proceeds, we anticipate that this trend will build, supported by, among other factors, the increasing prevalence of large pools of individually directed assets that are well-suited to the managed-account approach."