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“Fee only” financial planning update

June 28, 2014

It was great to read in Financial Planning Magazine that the Boards of two of the nation’s most prominent financial planning organizations (CFP and NAPFA) finally synchronized their definition of “fee only financial planning”. Under the new rules, a planner cannot even own a minority interest in a commission-based business. One prominent planner said that he might have to give up his NAPFA membership and fee-only business claim because he owns less than 2 percent of a family real estate business even though the business is located in another state and he is a completely passive shareholder.

The news does not affect me. In my case, it it clear that I never met the definition because I ‘ve always owned one or more commission-based businesses  (Freedom Benefits and Members Insurance Exchange). It does not matter that the businesses are otherwise completely separate and that there may be no overlap between the clients of the insurance exchange and advisory clients.

So in my case, I’ll continue to only charge fees for my work but I won’t call it “fee only”.

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