Why are you not already working with an independent, fee-only adviser?
July 7, 2020
Here is what we’ve heard over the years:
"I like the safety and security I feel with a big bank or brokerage firm."
The Truth – most fee-only financial advisory firms hire the largest financial institutions on the planet to custody (meaning, to safekeep) assets for their clients (Charles Schwab, Fidelity, TD Ameritrade, and Pershing are the largest RIA custodians).
"I get 'exclusive access' to interesting investment ideas."
The Truth – this is a great pitch by the private banks and wirehouses, but we’ve seen what their “exclusive access” looks like and it’s usually not very exclusive at all. Be careful about chasing access as you might be disappointed and may end up paying extra, unnecessary fees as there is often a “pay to play” component on the bigger platforms. Make sure to ask lots of questions."I have access to banking services like credit cards, mortgages, lines of credit, etc."
The Truth – are you really getting the best credit card, mortgage, line of credit when they’re all coming from the same place? Probably not. Cross-selling has been a practice of financial institutions for years, but is it in your best interest or the bank’s? Most fee-only financial advisory firms can access broad swaths of banking products at very competitive rates without being tied to one provider and without being incentivized to steer clients toward products that make the adviser and their firm additional compensation. Make sure you understand conflicts of interest and compensation arrangements."I love seeing all my finances in one place and having the ability to move money between accounts."
The Truth – before the internet, it was easiest to keep on top of your finances by consolidating accounts at one bank. Today, there are fantastic aggregation services that allow you to see all of your accounts (IRAs, 401(k)s, brokerage, checking, savings, mortgage, insurance, etc.) in one place, no matter where they reside. And moving money between financial institutions has never been easier. Financial technology (fintech) is helping consumers find a better way to manage their finances. In the words of Bob Dylan, “the times they are a-changin'.”
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. For additional information, please visit: https://verumpartnership.com/disclosures/
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such.
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