Are You REALLY Getting Your Money’s Worth from Your Investment Advisor?

Small, independent investment firms often offer more personalized services, additional investment options, and better financial expertise at a lower cost than the big investment houses.

Private investors have been led to believe they should follow investment planning along two basic premises: 1) follow the herd and hire the large financial companies as a “safer bet”; and 2) believe that time heals all. Unfortunately, this is often a flawed approach. The reality experienced by most private investors is they rarely receive personalized, customized, and timely advice from fee-heavy large institutions. The “big box” institutions do not customize their offerings for individual investors. They purchase common funds, use off-the-shelf investing formulas, and follow largely generic strategies even though the individual investor is actually paying for specific, tailored guidance and personalized service.

As a result, the big firm investor is forced to accept a one-size-fits-all investment strategy and hope that the time to reach productivity (investment growth) is closely aligned with their lifetime horizon for needing cash. Worse, most of the larger institutions infrequently contact their clients and actually prefer mass email notifications in lieu of personalized calls. In a highly dynamic and fluctuating financial world, private investors deserve much more specialized attention for their hard earned nest eggs.

The reasons that individual investors do not experience a proactive relationship with large institutional investment firms are simple: there is significant time and planning required to determine individualized recommendations, and even more effort to execute against those intentions – during which activities the institutional firms do not make money. In contrast, there are many private wealth advisors in boutique firms who provide very high levels of service at rates dramatically less than larger institutions.

While there may be a few advisors within larger organizations who subscribe to a higher service philosophy, they are much a much smaller number of people. I know this because I spent my early years working in those same institutions.

Despite the “bigger is better” mentality, I have found that there is a direct correlation between the size of an advisory practice and the knowledge, skill, and personalized attention they provide. Moreover, many of the smaller, boutique firms demonstrate the acumen and knowledge to identify, align with, and establish relationships with many external investment partners and opportunities that are simply not offered by the operating parameters of the larger institutions. They do this by functioning as “Independent Advisory Companies” or (“IAC’s”).

IAC’s hold true to a mission statement, which is closely aligned with a neutral position to their clients. A truly independent firm does not first look to a predetermined investment into which they plug their client; rather, they are driven by an inherent sense of right and wrong, a strong moral compass, and market savvy empowering them to provide actively managed portfolios to meet the highest client expectations and annualized returns.

Another major benefit of small independent firm is their low cost structure. They do not have the extensive overhead, expensive advertising, and inefficient bureaucracies of the big investment houses. As a result, they can pass on those savings to their private clients while at the same time offering very high levels of service, attention, and expertise.

Moreover, smaller firms can customize their fees in a variety of forms to best match the client’s overall objectives. In summary, independent investment firms offer the best of both worlds: personalized financial advisory expertise at a lower cost. Is it time to reconsider your choice of an investment advisor?

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