Why You Need to Work With a Fee-Only Advisory Firm
When you hire a financial advisory firm, you have some expectations from them on how you can save, invest and grow your hard-earned cash. The financial advisor should be professional, independent and provide sound financial advice. In case you have not hired a Fee-Only financial advisor, you might not get what you signed up for.
There are over 200,000 financial advisors in the United States, and this number is expected to rise in the coming years. But of these, only about 2,000 are fee-only and are registered with the Personal Financial Advisors Association. Transaction-based financial advisers make their money from commissions which they make from selling financial products. However, fee-only advisory firms do not sell any products thus they do not work on commissions. Instead, their customers pay them a flat fee for the individual financial advisory services that they provide rather than from the investments they recommend.
Most of the financial advisory businesses are commission-based which indicates that their revenue is linked directly to the investments and financial products they sell to you. These firms might call themselves financial advisors but they are majorly interested in promoting their merchandise. Hence, they may suggest some financial products more than many others since they would like to make a commission from them. Hence, it is relatively tricky for you to examine whether the investment portfolio they have suggested is most acceptable for your portfolio.
On the other hand, fee-only advisory firms like Financial Fiduciaries LLC do not earn any commissions since they do not sell any financial products. Thus, clients know that fee-only advisors work for their best interests and are not attached to any investment product or company. For this reason, they supply independent and impartial investment, and they don’t have any conflict of interest. They could openly recommend investments and products that are suitable for their customers.
But, watch out for companies that use fee-based instead of fee-only as these two aren’t similar. Fee-based financial advisors collect both commissions and fees, and they might also recommend some products endorsed by the companies that sponsor them.
A fiduciary is a fiscal expert who’s held out in trust and has the legal responsibility to put the clients’ interests above their own. Fee-only financial consultants like Thomas Batterman would be the sole financial experts that run a suitability standard. The state and federal regulators respect fee-only financial advisers highly that provides you more reasons to select fee-only financial advisory companies.
Before choosing a fee-only financial advisory firm, do some due diligence and research on it. Ask numerous questions before you enter into a professional relationship with a financial advisory business.