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 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. 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. However, fee-only advisory firms do not sell any products thus they do not work on commissions. Rather, their clients pay them a flat fee for the independent financial advisory services they offer instead 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 companies might call themselves as financial advisers however they’re primarily interested in promoting their merchandise. Therefore, they may give some suggestions on a few financial products more than many others since 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. Hence, clients comprehend that fee-only advisors work for their best interests and are not attached to any investment company or product. Due to this, they provide independent and unbiased investment, and they do not have any conflict of interest. They might freely recommend products and investments which are most 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 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 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.
Prior to picking a financial advisory company, do some due diligence and research on it. Ask numerous questions before you enter into a professional relationship with a financial advisory business.