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.
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. 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. 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 flip side, fee-only advisory companies like Financial Fiduciaries LLC, don’t make any commissions as they don’t sell any financial products. Thus, clients know that fee-only advisors work for their best interests and are not attached to any investment product or company. 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 charge both fees and commissions plus they may also suggest some goods endorsed by the businesses which sponsor them.
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 experts like Thomas Batterman are the only financial experts that work 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.
Do some due diligence and research on the fee-only financial advisory form prior to selecting a flourishing financial advisory firm. Ask several questions prior to entering into a professional relationship with a financial advisory company.
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