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A Fee-Only Planner Responds

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To The Editor:

In his Dec. 22/29, 2003 column in National Underwriter, Jack Bobo criticizes “fee-only [financial] planners who do not disclose that they have ties to the companies that sell the products they recommend.”

Yes, the term financial planner is in vogue and makes it difficult for people to determine who they are really dealing with. It is important to pick an advisor with integrity, common sense, knowledge and ability. Another key is making sure that the compensation system is transparent and one that eliminates or reduces conflicts of interest.

The National Association of Personal Financial Advisors (NAPFA) is a professional association that provides consumers a vehicle to turn to when seeking a fee-only financial planner who is unbiased, objective and works for the client. Their oath pledges that “The advisor does not receive a fee or other compensation from another party based on the referral of a client or the clients business.”

In order to join this group, I had to forfeit my brokers (Series 7) license to ensure that I cannot receive a commission. My only income from clients is the fee they pay me directly, not income derived from selling a particular companys products or services. It is a simple concept that eliminates and reduces conflicts that could be harmful to a client.

A client needs to complete his due diligence about his advisor. I encourage my clients to scrutinize my background and credentials. I further encourage them to talk about the fee-only concept and incorporate the wording in my contract.

NAPFA does a wonderful job of ensuring that its members are objective and that their focus is on their clients financial well being.

Neil Treger
Treger & Associates
Lexington, Va.

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 20, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.