The growth in the financial planning industry over the past few decades has led to the establishment of several professional associations that are dedicated to furthering the interest of advisors as well as protecting and educating the public. Three major organizations now stand above the rest in this category: The Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), and the National Association of Insurance and Financial Advisors (NAIFA). These organizations each provide a wealth of benefits for both advisors and consumers that have combined to elevate the quality and public perception of the financial planning industry in the U.S.

The Financial Planning Association (FPA)
The FPA was created at the beginning of 2000 with the merger of the Institute of Certified Financial Planners (ICFP) and the International Association of Financial Planning (IAFP). One of its chief goals is to help the public understand what services financial planners can provide and exactly how they will pay for them. The FPA requires all members to adhere to its standard of care, which includes full disclosure of all forms of compensation and possible conflicts of interest. The FPA website provides a wealth of tools and resources for consumers including articles, book, brochures, a financial planning blog, a retirement planning app for smartphones and a search feature that allows users to find member planners in their area. It also sponsors several community outreach programs that are designed to promote consumer awareness of the importance of financial planning, including:

  • National Financial Literacy Month
  • America Saves Week
  • Money Smart Week
  • The Financial Four
  • Financial Planning Week

The FPA has also worked in coordination with other consumer protection groups in the past to help promote the protection of the elderly from financial abuse. It also created a National Financial Planning Support Center on Oct. 8, 2001 to provide free financial advice for those who were directly affected by the events of 9/11.

The National Association of Personal Financial Advisors (NAPFA)
This organization is dedicated to furthering the interests of fee-based advisors in order to provide the public with competent, unbiased financial planning. It was begun in February 1983 and has since grown to over 2,000 members and hundreds of academic and financial affiliates. Its website includes useful links, an advisor search engine and other resources. Member advisors are required to take a fiduciary oath that they will always put their clients’ interests unconditionally ahead of their own and take a holistic approach to planning that deals with all aspects of their clients’ finances without charging commissions. They are also required to submit a sample plan in the format that they intend to use in their practices for approval, along with the financial planning software that they intend to use.

The National Association of Insurance and Financial Advisors (NAIFA)
NAIFA is by far the oldest financial planning organization in existence today. It was founded as the National Association of Life Underwriters in 1890 and differs from the FPA and NAPFA in that it focuses chiefly on the insurance industry and directs its efforts towards creating and protecting the tax advantages of insurance and annuities. It also promotes private ownership of health insurance and other benefits. It has collaborated with regulators and governments at the state level to work with retirees and elderly consumers who buy annuities and other fixed products, to protect them from unscrupulous salesman and business practices.

NAIFA is also attempting to create a national association of agents and brokers that will allow consumers to retain their insurance agents if they relocate to a state where the agent or broker is not licensed. NAIFA endeavors to train its members how to correctly coordinate and integrate their clients’ insurance coverage into the rest of their financial plans and also how to act ethically in their clients’ best interests.

Its website offers resources for both advisors and consumers, including links to other key organizations such as the Institute for Life and Health Education and the state insurance commissioners, consumer articles and public service announcements, as well as a plethora of educational information. NAIFA is heavily involved in community outreach with programs that are sponsored by its local chapters in health care, helping the homeless, educating young people, HIV education, substance abuse, family and eldercare issues as well as relief support for various crises that occur in the U.S. Its efforts were lauded on six separate occasions in the 1980s by both the Reagan and Bush Administrations.

The Financial Planning Coalition
The financial planning industry has made an increasing effort over the years to make its presence felt in Washington. To this end, the FPA teamed up with the CFP® Board of Standards and NAPFA in 2008 to create the Financial Planning Coalition. This organization has three distinct goals:

  1. To ensure that financial planners deliver transparent, fiduciary quality services to the public
  2. Unify, update and overhaul the hodgepodge of obsolete rules and regulations that govern much of the financial industry
  3. Cover the numerous regulatory gaps in the profession

The coalition is now working with legislators to create and enforce a blanket fiduciary standard for all financial professionals who provide any kind of financial advice or present themselves to the public as financial planners in any capacity. The coalition is also lobbying for the creation of a federally governed oversight board that would oversee the financial planning profession and establish minimum standards of industry practice and competence (albeit at a level somewhat below the standards set by the CFP® Board of Standards.

The Bottom Line
The financial industry has continually evolved and adapted itself to meet the changing needs of consumers over the decades. Although they do not all focus on exactly the same issues, organizations such as the FPA, NAPFA and NAIFA are striving to provide higher standards for the financial planning profession and greater protection for consumers through a combination of community programs, public educational initiatives and congressional legislation.

Related Articles
  1. Professionals

    Key Steps To Building A Great Financial Planning Practice

    Following the status quo will kill your financial practice. Find out the tips you need to follow to keep you a step or two ahead of the competition.
  2. Options & Futures

    Shopping For A Financial Advisor

    Finding your perfect advisor is as simple as shopping for a car. Read on to learn more.
  3. Professionals

    Ethical Standards You Should Expect From Financial Advisors

    Professional ethics in the financial services profession can be confusing. Here are some ways to ensure you are getting the best out of your advisor.
  4. Professionals

    Why Clients Fire Financial Advisors

    The reasons most clients fire their advisors are very simple and easy to address. Find out what you should be doing to keep your clients.
  5. Professionals

    Broker Commissions Are Here To Stay

    With two developed nations adopting a firm anti-commission stance, questions have arisen over whether or not the United States should follow suit. Find out why such a development is unlikely.
  6. Personal Finance

    Top 10 Most Valuable Sports Teams in 2015

    Cleats, pads and profits: we take a look at the top 10 most valuable sports teams in the world.
  7. Mutual Funds & ETFs

    ETF Analysis: Vanguard Intermediate-Term Corp Bd

    Learn about the Vanguard Intermediate-Term Corporate Bond ETF, and explore detailed analysis of the fund's characteristics, risks and historical statistics.
  8. Insurance

    Whole or Term Life Insurance: Which Is Better?

    Learn the difference between term life insurance and whole life insurance. Understand when it is beneficial to buy each type of life insurance.
  9. Investing

    The 8 Best Business and Finance T.V. Shows

    With so many talking heads to choose from, which is the right show for your business and money matter needs? We review the best shows on now.
  10. Professionals

    How to Protect Elderly Clients from Predators

    Advisors dealing with older clients face a specific set of difficulties. Here's how to help protect them.
RELATED TERMS
  1. Fast Fashion

    Definition of "fast fashion."
  2. Financial Singularity

    A financial singularity is the point at which investment decisions ...
  3. Open Architecture

    The option offered by an investment firm to let its clients invest ...
  4. Advanced Diploma In Insurance

    A qualification earned by insurance professionals and conferred ...
  5. Associate In Personal Insurance ...

    A designation earned by professionals looking for training in ...
  6. Fintech

    Fintech is a portmanteau of financial technology that describes ...
RELATED FAQS
  1. What are the benefits of financial sampling?

    Financial sampling allows auditors to approximate the rate of error within financial statements. For accounting purposes, ... Read Full Answer >>
  2. What are the differences between a Chartered Financial Analyst (CFA) and a Certified ...

    The differences between a Chartered Financial Analyst (CFA) and a Certified Financial Planner (CFP) are many, but comes down ... Read Full Answer >>
  3. What are the benefits of hiring a Chartered Financial Analyst (CFA) to be my financial ...

    A Chartered Financial Analyst (CFA) has successfully passed rigorous coursework in the fields of economics, financial analysis, ... Read Full Answer >>
  4. What types of companies hire a chartered financial analyst (CFA)?

    The Chartered Financial Analyst, or CFA, program is a professional certification awarded by the CFA Institute. CFA candidates ... Read Full Answer >>
  5. How do I get started with a career in asset management?

    The asset management industry has a variety of different career paths. Depending on what asset management area you would ... Read Full Answer >>
  6. Under what circumstances would I benefit from a high net worth insurance policy?

    A high-net-worth insurance policy is specifically tailored to suit the needs of high-net-worth individuals. It is specifically ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!