I’m too often today embarrassed by the state of personal financial advisory associations and occasionally feel the need to say something about the politics of associations and the lack of leadership of those who stray from their mission to advance alternative agendas.
That’s my way of warning that if you are here for personal financial information, this post may not interest you!
The National Association of Personal Financial Advisors (NAPFA) – a group that I always thought of as a , though question the leadership’s actual – recently promoted an article on their social media feeds under the guise of promoting the Fiduciary Rule, however, the linked article is nothing but extreme politics, fearmongering if regulators change a very bizarre and warped rule, and fake news about how consumers are benefiting when actual outcomes for consumers are not likely to change (I may have something to say about that article itself in a future blog, but don’t want to provide it any additional coverage).
This isn’t the first time NAPFA has let politics color its public positions. I’ve had scheduled phone calls with leadership and asked specific questions about NAPFA’s political stance and how it benefits myself which were going to be covered in a phone call with CEO Geof Brown which he canceled just prior with no offer to make up.
NAPFA’s mission statement as stated on their website is:
We provide networking opportunities, education, business development, and advocacy to promote the professional success of fee-only, comprehensive financial advisors.
For some reason, I don’t see how promoting attack articles advances my interests as a fee-only, comprehensive financial advisor, how it brings our message to the public, or how it allows NAPFA to influence policy in an administration it clearly takes issue with in any positive way.
I’ve been a member of NAPFA for over eight years. Over that period, I’ve seen the current ‘social justice’ movements on college campuses creep into leadership, likely due to overlap in NAPFA members who work in academia. NAPFA used to have consumer outreach messages and events, but today prefers to advance regulation on non-members as its outreach.
It’s been many years since I’ve seen NAPFA do much in the way of promoting fee-only, comprehensive advisors in any meaningful way. Most consumers who find me through their search for a fee-only, independent fiduciary advisor unfortunately find me through NAPFA, though all find NAPFA from others who promote our message, not from NAPFA itself doing any marketing.
It’s that consumer link that unfortunately is still important for me as a smaller advisor. I’ve given up industry association memberships due to their shift from promoting members and their message to promoting political agendas.
While I’ve written about how many of all political stripes support the Fiduciary Rule in my past few blogs, NAPFA’s use of an extremely political article in order to make a cheap statement is rather concerning. Like other associations, NAPFA claims to promote policy – though as an outside observer my belief is they simply go along with policy rather than having any real influence – and as a group that wants to promote policy it seems like joining the side out of political favor is a very poor way to gain influence to promote your interests.
Why is NAPFA promoting political attacks on an administration in support of a rule that doesn’t advance the interests of fee-only financial advisors?
I don’t have an answer since my prior questions to Mr. Brown were ignored. Below are a few obvious likely motivations:
It is not a secret that many believe that with the Fiduciary Rule that there will be more interest in NAPFA membership which would obviously increase revenues.
Current large member firms believe they will benefit by raising or keeping fees high by putting upstart competitors who can not afford the time or money to attempt to comply out of business (I say attempt to comply because there is no complying with this rule, it is entirely arbitrary).
NAPFA also allows Academic Affiliate memberships, which has led to academics using the group for their own career and political goals. Academics have outright threatened to leave and form new groups if their political aims are not met (and if there was any leadership at NAPFA they would encourage them to do just that rather than to support and promote these individuals).
While NAPFA still has probably the most concentrated group of real professionals, it will see that erode if it continues to give in to politics.
It’s a sad time when cheap virtue-signaling lightly covers the move from promoting advisors and consumer outcomes to politics. Unfortunately, I think just like most professions we have to spend too much of time these days on politics, so too do real financial advisors who are more concerned with advancing consumer outcomes than promoting politics.
Which, at one point, associations realized that was what the value proposition to members was.
PS – Being an independent and more libertarian minded I thought 2017 would lead to a lessening of the extreme and ugly political posts from leaders and academics in the personal finance field, but as this NAPFA post goes to show, it’s only gotten far more ugly and far more extreme. Not a few weeks ago an association promoted a similar, but even worse attack article from a communist blog. I’m not even sure NAPFA and these groups may read beyond the clickbait titles.
PPS – Meanwhile, during one of the times of the most need for financial advice some of my other groups are hiring the same academics and ‘social justice warriors’ to provide lectures and lobbying support. And, I’ll be here to call them to account for it as well!