The value of independent fee-only financial advice

The consultant, the professional firm, and the fee-only financial advisory company are professionals or firms that are paid solely by their client and, by law and ethically, cannot receive any compensation from any intermediary such as banks, asset management companies, investment firms, or insurance companies. This sets them apart significantly from others

The consultant, the professional firm, and the fee-only financial advisory company are professionals or firms that are paid solely by their client and, by law and ethically, cannot receive any compensation from any intermediary, such as banks, asset management companies, investment firms, or insurance companies. This sets them apart significantly from other professionals who use the label "consultant" but carry out activities that are in conflict of interest with their clients.

The advisory service offered by banks, insurance companies, and investment firms is carried out in clear conflict of interest, as the interest in recommending the best operation for the client conflicts with the primary interest of selling products to clients that yield higher returns in terms of commissions and other income.

Further confusion is generated by the figure of the financial advisor authorized to offer services off-site. Despite the label of consultant, these financial advisors are nothing more than the former financial promoters, that is, sellers of financial products; they too, to maximize their profits, do not always recommend the best products but those from which they earn higher commissions.

This clear conflict of interest is absent for fee-only financial advisors.

The main interest of fee-only financial advisors is to maximize the client's benefit by minimizing the commissions paid on products and optimizing the asset allocation of the client's portfolio.

Fee-only financial advisors are paid only by their clients, and their income depends solely on their ability to provide quality recommendations to their clients.

Fee-only financial advisors do not engage in any sales activities, have no relationship with those who sell financial products, but provide only advice and assistance to their clients for the proper planning of their assets. While for a bank operator or sales network it is convenient to sell the product that generates the most commissions, for the fee-only consultant it is only convenient to recommend the products best suited to the client. It is clear which of the two professionals can provide the best recommendations for the client.

Fee-only consultants never touch clients' money, which remains deposited in the client's trusted bank; the recommended transactions are carried out by the client themselves, supported by the independent professional.

The fee-only consultant provides recommendations considering the client's overall portfolio, even if held with multiple banks. In this way, the recommendations are as appropriate as possible for the client's profile. Furthermore, they can provide a consolidated representation service of the portfolio and its performance.

Finally, fee-only consultants carry out in-depth analyses of existing investments and prepare the most appropriate investment strategies to achieve the correct level of risk and adequate protection of assets.

In summary, fee-only financial advisors are free from the economic conflict of interest typical of traditional operators, who are tied to the bank or sales network (investment firm) to which they belong and must mediate the interests of the client with those of their employers. For this reason, the best strategy to prudently manage your portfolio is to turn to an independent fee-only financial advisor.