Not all financial advisory and planning firms are created equal. In the world of investment advice, there are so many acronyms and terms thrown out to the public and it gets confusing for people.
One of our biggest pet peeves with financial firms is there is almost zero transparency in terms of how they get paid. That’s a problem. We have seen so many cases where other “advisors” were charging clients heavy commissions (sometimes up to 6%!) or sold people products without knowing anything about their situation (which is just wrong).
If a financial advisor cannot explain his or her fee structure to you in less than 10 seconds? Red flag.
But before we get into why being a fee-only firm is important, let’s briefly define the terms.
Fee-only: Paid for advice or assets managed. Fiduciary. Transparent. No commissions, selling products or hidden fees. Advantage? Client.
Fee-based: May receive commissions or fees on products sold (ex: insurance, banks, brokers) and/or paid based on assets managed. Advantage? Advisor.
1. Transparency is Key:
Imagine you are getting ready to buy a car, but when you are ready to sign, they tell you the price you are paying for the car is higher than what they told you and there are extra fees you have to pay them every time you use it. You would never agree to that. Unfortunately, similar things can happen when working with financial firms.
We believe in cutting through the crap (technical investment term) and presenting your financial options in plain English. Being fee-only means we are compensated based on the assets we manage or via a financial planning fee. There are no hidden fees and no commissions. We do not sell investment or insurance products. It is a straightforward, transparent structure where you know exactly what you're paying for. We believe nearly all firms will start migrating to this model over time, but as a consumer, you should always know what type of arrangement you are entering.
2. Fiduciary Duty – Your Best Interest is The Priority:
One of the first questions you should ask a potential financial advisor is if they are fiduciaries. As fiduciaries, we're legally bound to act in your best interest. Being a fiduciary aligns the financial firm’s advice with the goals of the client, creating a relationship built on integrity and client-centric decision-making. It’s a joint partnership that should increase your chance of financial success.
3. Conflict-Free Advice:
Conflicts of interest are constantly present in the financial services industry. If there are conflicts present, they should at least be disclosed and transparent with the end consumer. Unfortunately, that is not always the case. Unlike some commission-based sales models, our fee-only structure ensures that our advice is focused on what's best for you. We're not influenced by third-party incentives or sales targets. We do not sell any products or try to get you into something that doesn’t make any sense for your family. And there are no hidden fees.
4. Personalized Service Tailored to You:
One size does not fit all when it comes to financial planning. A friend of ours once told us, “If you met one family. You’ve met one family.” Literally every single situation is different and requires a customized plan. One of the things that makes us different is providing personalized service and treating our clients like family. We can’t do that if we don’t take the time to understand your individual needs, goals, and aspirations.
5. Educational Approach:
Fee-only advisors often emphasize financial education, empowering clients to make informed decisions and actively participate in their financial planning. It’s not a set it and forget it approach and it can change over time. Our goal is to help clients understand the reasons behind our decision making and for us to make informed decisions together along the way. It’s also important to help educate our clients children as they get older and help to set them up for success as well.
Choosing a fee-only financial firm is not just a smart decision; it's an investment in peace of mind (Steve's Fee-Only Network Profile & Mike's Fee-Only Network Profile). At North River Wealth Advisors, we are committed to providing clarity, removing complexities, and empowering you to achieve success. If we haven’t already, we are looking forward to connecting with you soon!
Authored by Stephen Blahovec and Michael Rausch of North River Wealth Advisors. We are an independent, fee-only financial planning and investment management firm located in Pittsburgh, PA servicing clients locally and across the country. To learn more, contact us here.
This content is developed by North River Wealth Advisors from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.