Why You Need to Work With a Fee-Only Advisory Firm
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 advisor should be professional, independent and provide sound financial advice. You might not get what you signed up for in the event you have not hired a Fee-Only financial advisor.
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. 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 companies might call themselves as financial advisers however they’re primarily interested in promoting their merchandise. Hence, they may suggest some financial products more than many others since they would like to make 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. Thus, clients know that fee-only advisors work for their best interests and are not attached to any investment product or company. For this reason, they supply independent and impartial investment, and they don’t have any conflict of interest. They could openly recommend investments and products that are suitable for their customers.
But, watch out for companies that use fee-based instead of fee-only as these two aren’t 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 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 many questions before entering into a professional relationship with a financial advisory firm.