Why I’m An Independent Fee Only Advisor
How many “financial advisors” have you encountered who all seem to do something a little different? The term financial advisor is broad and unregulated. This means that anyone can really call themselves this, but not many can call themselves an independent, fee only advisor.
An independent advisor, like myself, is not tied to any specific company or required to sell specific products. This allows the freedom to find the best financial products (I like to refer to them as planning tools) for clients and not the issue of selling proprietary products - which may be inferior to others in the marketplace.
How an advisor is compensated for their “advice” can cause a conflict of interest. If they are paid by commission, then they are compensated for selling you something (think mutual fund, life insurance, annuity, etc.). These arrangements are through brokerage firms or insurance providers. You need to consider: Are they recommending/selling the product because it’s truly in your best interest or because it has a good commission and the broker needs to pay their bills? Or because they work for a certain company and can only sell that company’s own products? There are ethical commission based advisors out there, but there are also those who want to get the biggest payout or limit their recommendations to higher commission paying products, or captive to their own firm. This presents a conflict of interest and it could be costly - to you.
Then there are fee only advisors who only charge a fee for their advice vs being compensated on selling something to you (example: 0.25% for retirement plan consulting, 1% of personal assets managed, a flat fee for a financial plan). I fall into this camp. I do not receive commissions for any investments you make. I do not sell funds, insurance or annuities, although these are planning tools that may be needed or appropriate for a particular scenario. This allows me to use what I think are the best options at the best price in the market for my clients. You get to rest assured that I won’t be selling you and instead will only be focused on what’s best for you (i.e. I’m fiduciary and can only act in your best interest).
Finally, there are advisors who fall in the middle between commission and fee only. They are called fee based, but they can still earn commissions and that, as we know, can cause a conflict of interest.
At the end of the day, I aim to have clients for life and serve them as my own family. That’s why I chose to specifically be an independent fee only advisor.
