A Fee-Only Advisory Firm-Why Work With One?
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 more than 200,000 financial advisors in the United States and this number is expected to increase in the coming years. But of these, only about 2,000 are fee-only and are registered with the Personal Financial Advisors Association. Financial consultants who charge based on the transactions make their money from commissions which they earn from selling financial products. But, fee-only advisory companies don’t sell any merchandise; thus they don’t work on commissions. Rather, they charge their customers a flat fee for the independent financial advisory services they supply rather 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 term themselves as financial advisors, but they are mainly interested in selling their products. Therefore, they may give some suggestions on a few financial products more than many others since they want to earn a commission from them. Thus, it is quite difficult for you to assess whether the investment portfolio they have recommended is most suitable for your portfolio.
On the flip side, fee-only advisory companies like Financial Fiduciaries LLC, don’t make any commissions as they don’t 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. As a result of this, they give impartial and independent investment, and they do not have any conflict of interest. They could openly recommend investments and products that are suitable for their customers.
Nonetheless, search for companies that use fee-based instead of fee-only as these two are not 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 fiscal expert who’s held out in trust and has the legal responsibility to put the clients’ interests above their own. Fee-only financial advisors like Thomas Batterman are the only financial experts that operate under a suitability standard. Federal regulators and the State regard fee-only financial advisors highly which gives you more reasons to choose Fee-only financial advisory firms.
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.