Never let it be said that financial planners are a sedate lot.
A growing rift has divided the community of 30,000 professionals who offer advice on taxes, retirement preparation, and investments.
The battle is over two words: "fee only," a term used by a growing number of financial planners, advisers, and brokers to indicate they offer advice on fee, not commission, basis.
But after what it said was growing misuse of the term, the 600-member National Association of Personal Finance Advisors trademarked "fee only," in effect taking the term as its exclusive domain.
The battle, largely waged in the on-line trade journal Financial Planning, pits Napfa officers against those at the Atlanta-based International Association for Financial Planning and the Denver-based Institute of Certified Financial Planners. Between them, those two groups represent 28,000 financial planners, about 10% of whom work for commercial or trust banks.
At issue is how financial planners and other professionals charge clients.
Financial advisers who advertise themselves as "fee-only" should be prohibited from taking commissions, even with separate clients, Napfa argues. The Buffalo Grove, Ill.-based group sought a trademark for the term because it claimed the practice of mixing fee-based and commission-based dealings has become more widespread-and harder for the consumer to detect.
"The problem is with how financial advisers obscure the issue and, at worst, misguide" clients, said Barbara Roper, executive director of the Consumer Federation of America. "You really have to dig for this information."
A Consumer Federation survey of 288 financial planning firms found that 58% who claimed they were "fee only" collected commissions as well.
Napfa claims there is no middle ground; you are either fee-only or you're not.
"You have to be practicing fee-only all the time, not part-time," said Mark Spangler, chairman of Napfa and owner of Seattle-based MFS Associates Inc., a fee-only firm.
Up-front fees are generally praised by consumer advocates because there are no hidden costs.
Napfa first looked at how to protect the "fee only" term in 1992, Mr. Spangler said. After much discussion, it sought and received a service trademark from the U.S. Patent and Trademark Office. Along with the Consumer Federation, Napfa unveiled the trademark at a press conference in January.
The Institute of Certified Financial Planners, with 12,000 active members, was first to strike back.
"We have certain standards set up in our code of ethics, some of which mention compensation method," said executive director David Brand, referring to a sister body, the Certified Financial Planner Board of Standards. Up to a quarter of the Institute's members are fee-only advisers.
The International Association for Financial Planning, with 16,000 members, fired its own salvo. In a letter to Mr. Spangler, dated Monday, president Peggy M. Ruhlin and executive director Janet G. McCallen said it was possible to have planners who work both on a fee-only basis and for commission-"at that client's choice."
But Mr. Spangler stuck to his guns.
"As a sensitive as we are to our colleagues concerns, we will not stand by silently and see the term "fee only" be debased, twisted and warped beyond recognition," Mr. Spangler wrote in a letter he plans to send to Financial Planning's on-line edition. He released a copy to American Banker on Tuesday.
Each governing body has called for a meeting to resolve differences.
Part of the problem, each side acknowledges, is how the Napfa trademark will be enforced. A Napfa advisory board is studying the issue and will release its recommendation at the body's annual meeting, May 15-18, in San Diego.
"My main concern is about the trademark of fee-only," said Mr. Brand. "I don't know what that means. What are the implications of this?"
