Why are you not already working with an independent, fee-only adviser?

By July 21, 2020 November 12th, 2020 No Comments

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'.”

If you’re not working with an independent, fee-only financial adviser, you may not be getting what you’re due.  Feel free to contact Verum Partners to see the difference.