A Fee-Only Advisory Firm-Why Work With One?
When you employ a financial advisory company, you’ve got some expectations from them on the way it is possible you can save, invest and increase your hard-earned money. The financial adviser ought to offer sound financial advice, be independent and professional. In case you have not hired a Fee-Only financial advisor, you might not get what you signed up for.
You will find more than 200,000 financial advisors in the United States and this number is forecast to increase in the next several 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. 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 companies might call themselves as financial advisers however they’re primarily 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. Thus, clients know that fee-only advisors work for their best interests and are not attached to any investment product or company. 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.
However, look out for firms that use fee-based rather than fee-only as these two are not the same. 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 financial expert who is held out in trust and has the legal obligation to put the interests of their clients above their own. Fee-only financial advisors like Thomas Batterman are the only financial experts that operate under 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.
Do some due diligence and research on the fee-only financial advisory form prior to selecting a flourishing financial advisory firm. Ask several questions prior to entering into a professional relationship with a financial advisory company.