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 adviser ought to offer sound financial advice, be independent and professional. In the event you haven’t hired a fee-only financial advisor, then you may not get exactly 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. However, of these, only about 2,000 are Fee-Only and are enrolled with the Personal Financial Advisors. Transaction-based financial advisers make their money from commissions which they make from selling financial products. But, fee-only advisory firms do not work on commissions as they don’t sell any products. Rather, their clients pay them a flat fee for the independent financial advisory services they offer instead from the investments they recommend.
A lot of the financial advisory firms are commission-based which means that their income 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. Thus, they might recommend some financial products more highly than others as they want to earn a commission from them. Therefore, it’s fairly tricky for you to assess whether the investment portfolio they’ve advocated 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. Therefore, customers know that fee-only advisers work to their best interests and aren’t connected to any investment product or business. For this reason, they supply independent and impartial investment, and they don’t have any conflict of interest. They might freely recommend products and investments which are most suited to their clients.
But, watch out for companies that use fee-based instead of fee-only as these two aren’t similar. Fee-based financial advisors accumulate both fees and commissions and they may also recommend some goods endorsed by the sponsoring companies.
A fiduciary is a professional in the financial field who is held out in trust and has the legal responsibility to set the interests of their customers above their own. Fee-only financial experts like Thomas Batterman are the only financial experts that work under a suitability standard. Federal regulators and the State have high regard for fee-only financial advisors which provides you with more reasons to pick fee-only financial advisory firms.
Before choosing a fee-only financial advisory firm, do some due diligence and research on it. Ask several questions prior to entering into a professional relationship with a financial advisory company.