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.
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, only about 2,000 are fee-only and are registered with the Personal Financial Advisors Association. Financial consultants who charge based on the transactions make their money from commissions which they earn from selling financial products. But, fee-only advisory companies don’t sell any merchandise; thus they don’t 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.
A lot of the financial advisory firms are commission-based which means that their income 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 businesses like Financial Fiduciaries LLC do not sell any financial products and thus don’t earn any commissions. Hence, clients comprehend that fee-only advisors work for their best interests and are not attached to any investment company or product. As a result of this, they give impartial and independent investment, and they do not have any conflict of interest. They can freely recommend products and investments which are best 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 accumulate both fees and commissions and they may also recommend some goods endorsed by the sponsoring companies.
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 advisors like Thomas Batterman are the only financial experts that operate under 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.
Before choosing a fee-only financial advisory firm, do some due diligence and research on it. Ask many questions before entering into a professional relationship with a financial advisory firm.
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