There used to be a clothing retailer that advertised that an educated customer is their best customer. That holds true in many industries, especially the financial advisory industry.
There are many Financial Advisors in the marketplace today. These advisors include stock-brokers, analysts, insurance agents, accountants and attorneys, as well as financial planners. They have different planning philosophies, investment philosophies, and different ways in which they generate income. When categorized according to income generating methods, they can be narrowed down into 3 groups, Commission Based (receives 100% of compensation from commissions on the sale of products), Fee Based (receives a portion of compensation from commissions on the sale of products and a portion from fees charged to clients) , and Fee Only.
Wisdom Investments is a Fee-Only planner. A Fee-Only planner is one who, in all circumstances, is compensated solely by the client, with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. We do not receive commissions, rebates, awards, finder’s fees, bonuses or any form of compensation from others as a result of a client’s implementation of our planning recommendations.
You might wonder why this is important. Well we believe that a financial planner who has a financial stake in the course of action that he/she recommends to a client faces an inherent conflict of interest and cannot be considered objective and unbiased. This is true even if the planner truly believes that he/she has only the best interests of the client at heart. Unfortunately, the vast majority of financial advisors in the United States are sellers of financial products. Some or all of their income may be dependent upon their ability to steer their clients to a limited number of the thousands of financial products available today. (Putting aside the conflict-of-interest factor, this limiting of choices, in and of itself, often is enough to impact the quality of the investment advice.) Many of their clients are not aware of their advisors’ dependence on selling products, or do not recognize its significance.
We believe that many of the problems that beset Americans today in their financial affairs – including the mis-management of debt, the failure to protect retirement assets and poor allocation of savings and investments – relate directly to the conflicts of interest that pervade the marketplace.
Call us and we will send you a free checklist of the questions you should ask your current advisor and/or any prospective advisors in which you may enter into a relationship.
And hey, hey, in the words of the late Sergeant Phil Esterhaus, “Let’s be careful out there!!”
Enjoy the Spring!
