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The National Association of Personal Financial Advisors (NAPFA)

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Updated March 02, 2022
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What Is The National Association of Personal Financial Advisors (NAPFA)?

The National Association of Personal Financial Advisors (NAPFA) is a professional association for U.S.-based, fee-only financial advisors. Formed in 1983, NAPFA requirements include asking its members to adhere to the organization’s code of ethics and take an annual fiduciary oath. Members must provide independent, objective financial advice to their clients and uphold the highest standards in the financial planning profession. They must earn their income from fees, not commissions.

Key Takeaways:

  • The National Association of Personal Financial Advisors (NAPFA) is a professional association for financial advisors formed in 1983.
  • NAPFA members must adhere to the organization’s code of ethics and take an annual fiduciary oath.
  • Members must provide independent, objective, quality financial advice to their clients and earn their income from fees, not commissions.

Understanding NAPFA

Financial planners can be broadly divided into two categories:
  • Companies such as LPL Financial, which are compensated with commissions from recommending specific investments to clients
  • Those who are compensated with a fee for providing objective investment advice, as with all members of NAPFA
NAPFA requires its members to be paid in fees, rather than commissions. This is because an advisor who is paid in commissions has an incentive to recommend the investments for which the advisor receives the highest commissions rather than the investments that are best for the client.

By charging an hourly fee or a fee based on a percentage of the client’s assets under management (AUM), the advisor’s incentives are aligned with the client’s incentives. NAPFA members are also prohibited from receiving referral fees for sending the client to another professional.

NAPFA’s stated values are as follows:

  • To be the beacon for independent, objective financial advice for individuals and families
  • To be the champion of financial services delivered in the public interest
  • To be the standard bearer for the emerging profession of financial planning

Key NAPFA Policies

NAPFA has three key policy issues/positions that govern member conduct and inform its overall mission:

  • Recognition and regulation of financial planning
  • A uniform fiduciary standard of care
  • Greater investment advisor oversight

NAPFA has additional requirements for its members. They must strive to provide objective advice and avoid giving advice in areas in which they lack expertise. They must keep all client information confidential unless the client authorizes sharing information. NAPFA members are required to earn continuing education credits to keep their knowledge and skills current.

Financial advisors who join NAPFA must be transparent in their interactions with their clients and do their best to ensure that clients understand how their money is being managed. NAPFA members are also required to act in a way that reflects positively on both NAPFA and the financial planning profession.

NAPFA Membership Standards and Requirements

NAPFA sets out four basic standards for its members:
  • Meet NAPFA’s definition of a fee-only financial planner
  • Comply with NAPFA’s prohibition of certain ownership interests and employment relationships
  • Comply with NAPFA standards and industry regulations
  • Provide prompt notification of certain disciplinary and legal events

A full member of NAPFA must pay a one-time, nonrefundable $150 processing fee, as well as annual dues of $695, and meet six exacting requirements:

  • Have a bachelor’s degree in any discipline from an accredited institution.
  • Obtain and maintain a certified financial planner (CFP) certification.
  • Agree to follow the fiduciary oath at joining and every renewal.
  • Commit to earning 60 continuing education hours in every two-year cycle. 
  • Maintain the firm’s current Form ADV on the U.S. Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) website for review.
  • Submit a comprehensive financial plan, participate in a peer review, or submit proof of completing a CFP Capstone course.

To become a member, see NAPFA’s application process.

NAPFA Resources and Activities

NAPFA’s website provides several resources to both financial advisors and investors, such as a “find an advisor” feature, consumer financial education resources, and guides to fee-only advisors and advisor selection. NAPFA holds member conferences that feature professional development and networking opportunities, virtual learning resources, awards, and chances to meet, interact with, and learn from other advisors.

Do National Association of Personal Financial Advisors (NAPFA) members get commissions from financial transactions?

No. NAPFA is strictly a fee-only organization, guided by the philosophy that its members must always act in the best interests of their clients. Financial advisors who are paid by commission face a conflict of interest, in that they may recommend investments that are more lucrative for them than they are for their clients.

Are NAPFA members required to be certified financial planners (CFPs)?

Full members are required to maintain CFP status. However, Pathway members are only required to have passed their CFP exam; they may still be working to fulfill their experience requirement.

When and why was NAPFA formed?

The idea for NAPFA was self-generated, initially discussed at a Society of Independent Financial Advisors meeting in 1982 in Atlanta by advisors who were unhappy earning commission-based income. They felt it put them in too much conflict with what was best for their clients. The organization was finally born in February 1983 in Atlanta, created by more than 125 advisors.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. The National Association of Personal Financial Advisors. “.”
  2. LPL Financial. “.”
  3. The National Association of Personal Financial Advisors. “.”
  4. The National Association of Personal Financial Advisors. “.”
  5. The National Association of Personal Financial Advisors. “.”
  6. Certified Financial Planner Board of Standards. “.”
  7. U.S. Securities and Exchange Commission. “.”
  8. Investment Adviser Public Disclosure, U.S. Securities and Exchange Commission. “.”
  9. Certified Financial Planner Board of Standards. “.”
  10. The National Association of Personal Financial Advisors. “.”
  11. The National Association of Personal Financial Advisors. “.”
  12. The National Association of Personal Financial Advisors. “.”
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