A Fee-Only Advisory Firm-Why Work With One?
You have some expectations from a financial advisory company on how it is possible to save, invest and grow your hard-earned cash when you hire them. 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 more than 200,000 financial advisors in the United States and this number is expected to increase in the coming years. But of these, the fee-and registered with the Personal Financial Advisors are just about 2,000. Transaction-based financial advisers make their money from commissions which they make from selling financial products. But, fee-only advisory companies don’t sell any merchandise; thus they don’t 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.
A good deal of the financial advisory companies are commission-based which implies that their income is connected directly to the investments and financial products that they market 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. 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. For this reason, they supply independent and impartial investment, and they don’t have any conflict of interest. They can freely recommend products and investments which are best suited to their clients.
However, look out for firms that use fee-based rather than fee-only as these two are not the same. 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. Federal regulators and the State regard fee-only financial advisors highly which gives you more reasons to choose Fee-only financial advisory firms.
Prior to picking a financial advisory company, do some due diligence and research on it. Ask several questions prior to entering into a professional relationship with a financial advisory company.