Financial Advisors: Is a Brand Name Better than an Independent Advisor?

There are many benefits to hiring a financial advisor. These professionals can help you build wealth while at the same time working to protect your future.

But a lot of this depends upon choosing the right kind of financial advisor for your individual situation. When you start looking around, you’ll see that you have many choices. Some advisors will be attached to a big brand name that you recognize, while others will be smaller, independent firms. Which type is best for you?

What’s in a Brand Name?

A brand name usually makes consumers feel safe. When we buy a car or refrigerator, for example, we will usually feel we are taking less risk buying a brand name than a name we’ve never heard of before. Does that same thinking hold true with financial advisors and financial planners?

Big-Brand Financial Advisors

When it comes to the financial industry, brand names may or may not necessarily offer the same benefits you may have come to expect. Here’s some information about these firms that can help you determine if a big brand name is right for you:

Big-Brand Financial Advisors

At some of the big brand name firms, one of the primary revenue sources is proprietary products (like mutual funds or insurance policies). So the representatives of that firm may be encouraged to sell clients the firm’s products. This can represent a conflict of interest when you come to them for financial advice.

Sales are Part of the Culture

Brand-name wealth management firms often make a portion of their profits from selling proprietary products, so along with this product-focused business model usually comes sales quotas. This product-first approach doesn’t always prioritize your investment goals as a client. While you may very well work with an advisor who sincerely wants to help you achieve your financial goals, they might be subject to quotas and pressure to sell specific products.

Advisors May Get Paid On Commission

At big brand firms, their employees are sometimes paid primarily on commission, not with fees. Even the most client-focused advisors at these firms may be pressured to “gather assets” as a first priority.

Sales Contests

If you choose to work with a brand name firm, you should also be aware that these firms in the past were known to use sales contests to increase sales of specific products. Advisors were incentivized to sell the most of a certain product, which might make them eligible to win a prize, often a luxury vacation. Thankfully, starting in 2020, this practice will be mostly prohibited by recent new legislation, Regulation BI (Best Interest). You can read more about this new legislation here.

The Independent Financial Advisors

There’s another choice out there, too: an independent advisor.

Independent financial professionals offer a robust platform of solutions to independently select the options that meet the needs of their clients. We strongly believe that the independent financial advisor business model is the one that puts both the clients’ and the advisor’s interests into harmony.

Focused on You

An independent advisor can provide fair and objective counsel to clients without the undue pressure of sales quotas or proprietary product restrictions. We believe clients can be more assured that their financial goals are being appropriately placed in the center of the planning and investing process.

Finding a Good Independent Financial Advisor

A financial advisor can be a key professional to help you achieve your personal goals, but not all financial advisors are the same. So you need to choose carefully. Here are some tips to finding the best advisor to help you succeed:
  • Always look for experience and a significant number of years in business. Markets are cyclical, and those who have not been through numerous cycles are at risk for not closely managing client risk. You don’t want your money to be a part of anyone’s learning curve. That’s why we recommend finding a firm that has been in business at least three decades, so they have survived at least two or more complete business cycles.
  • Look for the right credentials. Because your future requires careful financial planning, look for those who have earned the title of CERTIFIED FINANCIAL PLANNER™ professional. This means they have passed a rigorous exam, taken extensive coursework, amassed enough industry experience, and have agreed to uphold ethical standards, too.
  • Check their regulatory record by visiting brokercheck.org. Avoid any advisor who has client complaints or issues on their record. There’s just too much at stake to give someone the benefit of the doubt.
  • Learn how the advisor gets compensated and make sure it aligns with your goals and objectives.
Take your time in finding the right advisor. Doing your homework and carefully choosing can help ensure you find a great independent advisor who can be key in helping you protect your future and reach your life goals.

Alan Meckler

Since 1988 Alan Meckler has been in the financial services industry helping families, professionals and small business owners plan, save and invest for their retirement in the most tax-efficient way possible. He is committed to helping empower families, professionals and businesses to succeed asinvestors. His firm is different from other financial service professionals because they first focus onall levels of protection first, which include life, disability, long term care, and health insurance, then savings and growth. It's a model that works. As a seasoned financial advisor, he recognizes that life has many unknowns, but a little bit of planning and preparation can make even the most difficult of times a little bit easier.

Subscribe To Our Newsletter

Recent Posts

Schedule a Consultation

    Select all that may apply to your situation.