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 adviser ought to offer sound financial advice, be independent and professional. You might not get what you signed up for in the event you have not hired a Fee-Only financial advisor.
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, only about 2,000 are fee-only and are registered with the Personal Financial Advisors Association. 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.
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 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. Hence, clients comprehend that fee-only advisors work for their best interests and are not attached to any investment company or product. For this reason, they supply independent and impartial investment, and they don’t have any conflict of interest. They might freely recommend products and investments which are most suited to their clients.
Nonetheless, search for companies that use fee-based instead of fee-only as these two are not similar. Fee-based financial advisors charge both fees and commissions plus they may also suggest some goods endorsed by the businesses which 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 have high regard for fee-only financial advisors which provides you with more reasons to pick fee-only financial advisory firms.
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.