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 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.
You will find more than 200,000 financial advisors in the United States and this number is forecast to increase in the next several years. However, of these, only about 2,000 are Fee-Only and are enrolled with the Personal Financial Advisors. 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, they charge their customers a flat fee for the independent financial advisory services they supply rather 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 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. Hence, it is relatively tricky for you to examine whether the investment portfolio they have suggested is most acceptable 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. 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.
But, watch out for companies that use fee-based instead of fee-only as these two aren’t 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 fiscal expert who’s held out in trust and has the legal responsibility to put the clients’ interests above their own. Fee-only financial experts like Thomas Batterman are the only financial experts that work under a suitability standard. Federal regulators and the State regard fee-only financial advisors highly which gives you more reasons to choose Fee-only financial advisory firms.
Before choosing a fee-only financial advisory firm, do some due diligence and research on it. Ask numerous questions before you enter into a professional relationship with a financial advisory business.