Reasons for Working With a Fee-Only Advisory Firm
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.
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. But of these, the fee-and registered with the Personal Financial Advisors are just about 2,000. Financial consultants who charge based on the transactions make their money from commissions which they earn 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 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. Thus, they might recommend some financial products more highly than others as they want to earn a commission from them. Hence, it is relatively tricky for you to examine whether the investment portfolio they have suggested is most acceptable 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. 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 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 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.
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.