Vol. 2, Issue 4September 2010


DeSERANNO Becomes Grosse Pointe's Only Financial Planner Accepted as a Member of NAPFA

Don Joseph DeSeranno

Founded in 1983, the highly regarded National Association of Personal Financial Advisors has just over 1,500 carefully selected members nationwide. NAPFA has pioneered a set of standards of advisor education, training, and method of practice that truly serve the public interest, emphasizing objectivity, comprehensive planning, and broad training and experience. NAPFA’s requirements for membership exceed those of any other financial industry association, and more than half of those who apply are denied admission. Members of NAPFA consistently dominate the list of the nation’s leading financial planners. DeSERANNO Wealth Planning has been accepted as a member of NAPFA making DeSERANNO the only firm in Grosse Pointe who meets their high standards.

Why Should I Care that My Financial Planner is a NAPFA Member?
It indicates that a financial planner adheres to the industry’s most demanding practice requirements, including Fee-Only compensation, true comprehensive planning, and meets the industry's most rigorous standards of training and experience. NAPFA has created the financial planning industry’s clearest message about the level of responsibility and care that must be exercised on behalf of each client.

What Is A Fee-Only Planner?
NAPFA defines a Fee-Only planner as one who, in all circumstances, is compensated solely by the client, with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. A NAPFA member or affiliate may not receive commissions, rebates, awards, finder’s fees, bonuses or any form of compensation from others as a result of a client’s implementation of the individual’s planning recommendations.

Why is Fee-Only Compensation of Critical Importance?
A financial planner who has a financial stake in the course of action that he/she recommends to a client faces an inherent conflict of interest and cannot be considered objective and unbiased. This is true even if the planner truly believes that he/she has only the best interests of the client at heart. Unfortunately, the vast majority of financial advisors in the United States are sellers of financial products. Some or all of their income may be dependent upon their ability to steer their clients to a limited number of the thousands of financial products available today. (Putting aside the conflict-of-interest factor, this limiting of choices, in and of itself, often is enough to impact the quality of the investment advice.)
These advisors include stock-brokers, analysts, insurance agents, accountants and attorneys, as well as financial planners. Many of their clients are not aware of their advisors’ dependence on selling products, or do not recognize its significance.
NAPFA believes that many of the problems that beset Americans today in their financial affairs – including the mismanagement of debt, failure to protect retirement assets and poor allocation of savings and investments – relate directly to the conflicts of interest that pervade the marketplace.

What Does NAPFA Stand For In Addition To Fee-Only Compensation?
Of equal importance to Fee-Only compensation is an advisor’s commitment to a comprehensive approach to financial planning. Most of the nation’s financial advisors pay lip service to comprehensive planning but few actually provide it. In recent years, largely because of the runaway stock market of the 1990s, the practice and public perception of financial planning tended to be overly focused on investments in general, and stocks in particular – a trend encouraged and reinforced by the fact that most providers of financial advice benefit from the sale of financial products.
As a result, many members of the public have received a painful reminder frequently forgotten: the value of investments can fall as well as rise. If they were relying on a financial advisor who was merely providing investment advice, they are probably surprised by and poorly prepared for the bear market.
Why? If an advisor doesn’t understand the client’s full picture, the quality of advice in any one area, including investment advice, can suffer significantly. Competent and informed investment decisions must take into account all the other factors that comprise an investor’s financial profile, including tax, estate planning, insurance, risk tolerance, specific family circum-stances and ultimate financial goals. A truly comprehensive financial plan, therefore, is much more than investment advice. It is an all-purpose tool that enables planner and client, working together, to make better financial decisions because each individual decision is made within the context of the full picture.

What is NAPFA's mission?
To promote the public interest by advancing the profession of financial planning based upon all our core values, thereby improving the quality of clients’ lives. To set the bar high and make these standards commonplace in the practice of financial planning.