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Benefits of Financial Services

Personalized, focused financial services

Finding (and keeping) the right financial planner can be one of the more difficult, and perhaps costly, decisions you will make regarding your retirement. With over 300,000 professionals working under the designation of “personal financial advisor,” it can be difficult to understand who is who and what is best for you.

One thing is for certain, freedom and independence to find financial solutions that best fit your specific needs should be at the top of your checklist when choosing a financial advisor or financial services firm. Independent registered investment advisors (RIAs) take the time to get to know you, to understand your personal and financial goals, and to cultivate a relationship that is focused on helping you meet your investment objectives. The main reason being; it is in both parties best interest.

Here’s why an RIA may work for you:

An RIA is legally bound to work in your best interest.

Registered Investment Advisors are held to a fiduciary standard of care under the Investment Advisers Act of 1940.  They must File Form ADV with the U.S. Securities and Exchange Commission (SEC)

What does that mean to you?

First Understand Fiduciary:

Fiduciary: The highest legal duty of one party to another, it also involves being bound ethically to act in the other’s best interests. A fiduciary might be responsible for general well-being, but often it involves finances — managing the assets of another person, or of a group of people, for example.

Form ADV can give you a comprehensive view of how the registered investment advisor runs its business. It specifies ownership, clients, employees, and any disciplinary filings against the financial services firm itself or its employees. The form also contains a brochure that breaks down important details such as fee schedules, conflicts of interest, areas where the advisor may receive a commission (similar to the sale of insurance), and both the educational and professional backgrounds of key personnel within the firm.

So What’s the Difference?

Registered investment advisers are governed by the Fiduciary Standard while stockbrokers and registered representatives are not. They are held to a lesser measure, the Suitability Standard. Easily understood, the Suitability requirements merely calls for brokers to sell investments they believe are suitable for their clients, not necessarily what’s best for the client.

Further benefit resides in the fact that clients can have a direct line of communication with their investment advisors when working with an RIA; conversely, there is no way to ask a mutual fund manager why they’ve made a particular investment choice.

 Know how your financial services professional is getting compensated

It’s important to understand exactly how your advisor is compensated. Unlike brokerage firms and insurance professionals who are paid based off commission, most RIAs are fee-based, offering investment advice based on a set percentage of their client’s total assets. AUM or Assets Under Management, are what your flat fee is applied to in order to compensate your financial professional. They do not make money on the sale or purchase of securities; the only way fee-based RIAs can make money is to increase the value of your portfolio or AUM.

A Vested Interest:

Many RIAs operate as independent business owners. As such, most independent RIAs have a vested interest in building long-term, mutually beneficial relationships with clients. In comparison, many other financial service professionals are part of much larger firms, broker dealers, or insurance companies. In an RIA your clients must succeed if you want to, further strengthening the effort and dedication in the process and outcome.

RIA’s generally have relationships with a wide network of professionals who have expertise in a variety of areas including accounting, estate planning, and insurance. Relationships and networks like these allow the RIA to design a comprehensive strategy to meet your individual goals and objectives with all things considered.

Ask Questions

You are not alone and the questions you may be thinking are not uncommon. The most important thing you can do when researching and speaking to any financial services professional is ask questions. Whether it’s your retirement planning, tax situation, estate planning or assets at multiple places, it’s fundamentally important that your advisor truly understand you, your goals and your situation. Many independent registered investment advisors (RIAs) are in a position to do that and pride themselves on strong personal interaction with their clients and dedication to their needs. They believe that their independence is key to offering investment advice based on what’s best for their clients and with such, they will give you straight-forward answers that are truly in your best interest.

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