Bigger Isn’t Always Better When It Comes to Financial Advice


Here’s why a smaller, independent adviser could be a better fit for your financial needs than the big-name institutions.

To start with, there’s the bewildering array of titles, including broker, adviser, planner, manager and even coach. By the time they get to the method of compensation (fee-only, fee-based or commission) and the fiduciary vs. suitability discussion, the majority of the people I meet have no idea what it all means. It’s no wonder so many simply opt for the brand-name brokerage they see on TV instead of the small independent adviser who might be the better choice.

But when you go with Wall Street instead of Main Street, you lose a few things:

  • Control: When you work with an independent adviser, you’re the boss. Financial professionals employed by bigger firms often have quotas they have to meet or specific products they’re pushed to sell. Many firms are publicly traded – they answer to shareholders, and that becomes their priority.
  • Personal attention: See if this scenario sounds familiar. Maybe you’ve never seen the need for an adviser – but now you’ve left your job and you want to roll over your 401(k). So you talk to the guy behind one of the desks at your local bank and he tells you, “Don’t worry. I can manage your account for you.” He asks you some questions about risk tolerance and your retirement goals, and then he puts your life savings into mutual funds and tells you he’ll keep an eye on it. And because he always waves at you when come in, you believe him. The thing is, that same week, dozens of other people walked in, too, all with the same rollover needs. And he told them the same thing. The system is flawed. It’s physically impossible for that one guy to watch out for every one of those customers and their accounts. So now, instead of having a managed portfolio, you have what we call a buy-and-hold account – or what some people call buy and hope, because you’re just hoping the market does well. You know, the way they did in 2008.
  • A comprehensive approach: If you’re looking for a holistic approach to financial planning, you’re more likely to get it with an independent adviser who’s taking the time to get to know your needs and may be working with a team of professionals to provide more complete services.
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