Benefits of an Independent Registered Investment Advisor
- Personal Advice: When planning for your retirement, children’s education, tax situation, or estate distribution it’s vitally important that your advisor understand your goals and personal circumstances. Many independent registered investment advisors pride themselves on strong personal interaction with clients and dedication to their needs. Independence is paramount to offering investment advice based on what’s best for a particular client in light of that client’s unique needs.
- Fiduciary Responsibility: Advisors are registered with the Securities and Exchange Commission or State Securities Regulators and are subject to the Investment Advisers Act of 1940. As such, registered investment advisors have a Fiduciary Duty to act in the best interest of their clients at all times and to fully disclose any conflicts of interest. They offer objective advice. They are under no obligation to sell proprietary products and can recommend the solutions they think are best for their clients.
- Objective Relationship: The goal of an registered investment advisor is to help find solutions that are closely aligned with client needs and objectives. Many independent advisors work with complex portfolios requiring highly customized investment management, strategy, and consultation. Independence is essential to offering unbiased financial and investment advice based on what’s best for the client. Objective advice is crucial. When working with an independent advisor, you can be assured of no hidden agendas, no pressure to invest in proprietary products and no commissions for selling investment products. Investments are recommended for only one reason— to help fulfill the client’s goals.
- Fee Transparency: Independent advisors typically charge a fee based on a percentage of assets managed. This fee structure is client-oriented. It’s simple, easy to understand, and avoids surprises. It also gives your advisor an incentive to grow your assets. Clients understand what they’re paying and the value they are receiving.
- Independent Third Party Custodian: Registered investment advisors typically use third party institutional custodians to hold and safeguard their clients’ stocks, mutual funds and other assets. These independent custodians provide important services such as executing trades and preparing monthly brokerage statements for clients. The separation of investment decision-making from asset custody provides an additional layer of protection and safety for the client.
“Brokerage firms would like you to think that they perform the same functions as investment advisors. Many brokers call themselves ‘financial consultants’ or ‘financial advisors’. But they are not the same as independent investment advisors… an investment advisor’s fiduciary duty is on a higher plane, like that of a lawyer, a trustee, or the executor of an estate.” – Arthur Levitt, former SEC Chairman