How to choose an Independent Investment Advisory firm

How to choose an Independent Investment Advisory firm

Nov 18, 2018, 1:26:27 AM Business

If you’ve been investing for a long time and want to turn the responsibility of running your portfolio over to someone else, choosing an independent investment advisory is one way to do it.

Before you hire a firm, however, make sure you’ve chosen someone who really cares about your future and wants to protect your investments. Read our tips below to see what you need to look for in a wealth management firm.

Don’t Focus on Price

When you’re choosing an independent investment advisory, it’s easy to judge the differences between companies by one category: price. It’s simple, straightforward, and you can’t argue that one number is smaller than the other.

Verify Credentials

When choosing a firm, sit down with the advisor who will potentially be working on your account. You don’t want to have an interview with one person, only to learn down the line that you’ve been handed over to someone else.

Also ask where they worked before, whether they are a Certified Financial Planner, what other qualifications they can boast. Keep in mind that you’re the client, so it’s up to the advisor to win you over so as to get your business.

How Are They Paid?

There are different ways you can pay a CFP. Some charge a commission based on the products you buy from them, while others charge a set rate based on the size of your portfolio. You want someone who’s as invested in your portfolio’s growth as you are.

Be wary of hiring anyone who earns a commission on what they sell to you; they’ll be more interested in earning that extra money than making sure what they’re selling is the best fit for your needs.

The Bottom Line

Choosing an independent investment advisory may be one of the most important decisions you’ll ever make. Whoever you choose to access your accounts may change the fate of your retirement. That’s not to scare you away from making any kind of decision, but it is important to know that advisors are all different. Don’t make your decision on impulse; ask around for referrals from people you trust, and do your own deep-dive research.

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Track Record of Success

You should always ask about who they have worked with and how successful the project was. Some consultants may be great at pitching you but have no track record of success. That is why it is important to speak about the firm’s prior experiences with an issue similar to yours or with a company of your size.

Always make sure that the firms you’re interviewing can refer you to past clients who can confirm a successful project. Actual client references will help you determine which consulting firm can address your issue more efficiently.

An Experienced Team

You can learn a lot about a consulting firm based on how they pitch you as a client. The best consulting firms care about your time, and they won’t waste it by initially presenting to you with senior members of their team but using less experienced consultants to do the actual work. Whoever presents to your company at the beginning should also be who your team actually works with in the long run.

In addition to having an experienced consultant, your company also needs to determine whether or not you’d prefer to have an individual or group of consultants work on your case. Your company’s budget and needs will help you figure out how big of a team you should hire to achieve your goals.

Reasonable Cost Structure

Companies generally hire consultants when they cannot afford to build out a full team. So cost structure should be especially important when determining which consulting firm you want to work with. You want to find a firm that provides you with adequate services at a rate that makes financial sense.

Determining a reasonable cost requires more than simply finding the cheapest vendor. An inexperienced consultant who is cheaper but takes a longer time to reach your goal may be more costly than an experienced consultant who reaches your goal more quickly but with higher bill rates. Whatever level of experience your consultant has, you should keep your budget in mind when speaking with different firms.

Moreover, you want to work with a company that intends to solve your issue without dragging the contract on for too long for the purpose of keeping you as a client as long as possible. Good consulting firms will propose an end date for resolving your company’s problem that doesn’t extend indefinitely.

Added Value

Although it might seem wise to hire a specialist, companies should aim to hire a consultant who has worked in many industries. A generalist will be able to pull from different experiences across different industries and come up with creative solutions that your business would not have been able to come up with internally. You should seek to add extra skill and value to your team, instead of simply enhancing what your team can already provide as experts in their specific fields.

Working with the investment advisory manager is all about forming a relationship with someone who has a fiduciary duty to you and cares about your money as much as you do. Choosing the wrong person for the job has the potential to be disastrous, not only for you but for the next generation if you’re planning to pass wealth on to your heirs. Using our tips as a framework can make it easier to find a firm that’ll have your best interests in mind.

MRA is an Independent Investment Advisory firm that employs comprehensive financial planning and risk management strategies as core principles of its advisory process.

About Betterment for Advisors

Betterment for Advisors is a leading digital-first wealth management platform. By combining our robo-advisor technology with an advisor's personal touch, we are reimagining what's possible in wealth management. their automated, tax-efficient portfolio management, paperless back office, and intuitive user experience empower advisors to grow their businesses and build deeper client relationships. Hundreds of firms trust Betterment for Advisors to custody and manage client assets.


Published by avita dcosta

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