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 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. Financial consultants who charge based on the transactions make their money from commissions which they earn from selling financial products. However, fee-only advisory firms do not sell any products thus they do not work on commissions. Rather, they charge their customers a flat fee for the independent financial advisory services they supply rather 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 term themselves as financial advisors, but they are mainly interested in selling their products. 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 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 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 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.
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.