Independent Registered Investment Advisors are held to the fiduciary standard. Put on the books by the Investment Advisors Act of 1940, the fiduciary standard requires independent advisors to keep the best interests of their clients in mind at all times. In fact, they are legally required to put their client’s interest first—and always act accordingly. A Captive Advisor, one that is bound to their company – like JP Morgan Advisor or Raymond James – for example, will not be a fiduciary. This means they are not always looking for your best interest. Oftentimes, they are being forced to push products by their boss. This leads them to recommend investments that benefit them, and not always you. Make sure to ask if your advisor is a fiduciary.

THE BENEFITS OF INDEPENDENCE OVER BEING CAPTIVE

Independent advisors are not bound to any family of funds, investment products, or services. This provides clients with confidence – clients can trust that the products and services recommended by their advisors are in their best interests. For example, we recommend only investments that we believe in. A Captive Advisor, for example, that works at Merrill Lynch, or SEI will be pushing their products. They have quotas. You will be invested in what makes them the most, not what makes you the most. Additionally, you will have an advisor who does not have knowledge in taxation – which is one of the biggest mistakes someone can make. Hiring a financial advisor without tax knowledge means missed opportunities for you to save on tax, and also means they will often buy and sell investments without considering the tax implication they are creating.

To best serve their clients, independent advisors often seek to develop deep personal relationships, so as to fully understand each client’s specific needs and goals. What’s more, because independent advisors are entrepreneurial business owners, they value their client relationships and hold themselves accountable to their clients. For example, I manage and run New Century Investments. Unlike an advisor working at say, UBS, I view each relationship as my very own, not my “companies.” Therefore, I take pride in delivering exceptional service and take every client relationship seriously.

Independent fiduciary advisors typically operate on a fee-only compensation model—which is simple, transparent, and incentivizes growing a client’s assets. Therefore, when the client does well, so does the advisor. This often can be confused with advisors who are fee-based or commission-based. Always make sure you are asking your advisors how they are compensated. Do not overpay for value.

Acting as financial quarterbacks, independent advisors help clients come up with a financial game plan that looks at the big picture, no matter how complex their financial needs. While some independent advisors concentrate on specific investment strategies, others can assist with comprehensive services, offering a high level of expertise on financial planning, estate planning, complicated tax situations, charitable giving, intergenerational wealth transfer, and more. A Captive financial advisor will be looking to push products for their company, not at your overall situation. The problem with a Captive advisor – and even with an independent advisor who has little to no tax knowledge – is that you will not be getting the most for your money.

Look at a financial planning firm, like New Century Investments. We coordinate in person, over team meetings, and we work in the same office. Therefore, we are able to deliver efficient, improved results for our client’s tax and financial investment plan. This means no more will a client have to work with 2 separate companies and advisors, paying higher costs, and getting less service value.

If your financial advisor is “captive”, then you are not likely being provided with fully transparent investment advice. If your advisor does not know tax, then you are missing financial and tax planning opportunities. There is no cost to you for scheduling a complimentary consultation. We will give you honest advice and provide you with recommendations for your unique circumstances.

Call today at 817-238-6300, email Matt.Ward@NewCenturyInvestments.com, or schedule an appointment online. Your journey to financial freedom awaits.

Matt Ward, CFP®