Bigger Not Always Better With Financial Advice


Bigger Isn’t Always Better When It Comes to Financial Advice

Here’s why a smaller, independent adviser could be a better fit for your retirement-planning needs than the big-name institutions.

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For an individual investor, finding the right financial professional can be a challenge.

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To start with, there’s the bewildering array of titles, including broker, adviser, planner, manager and even coach.

And then there’s all those letters (RIA, CFP, CFA and so on) and numbers (Series 6, 7, 65 and 66) that represent certifications and licenses.

By the time they get to the method of compensation (fee-only, fee-based or commission) and the fiduciary vs. suitability discussion, the majority of the people I meet have no idea what it all means. It’s no wonder so many simply opt for the brand-name brokerage they see on TV instead of the small independent adviser who might be the better choice.

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But when you go with Wall Street instead of Main Street, you lose a few things:

  • Control: When you work with an independent adviser, you’re the boss. Financial professionals employed by bigger firms often have quotas they have to meet or specific products they’re pushed to sell. Many firms are publicly traded – they answer to shareholders, and that becomes their priority.
  • Personal attention: See if this scenario sounds familiar. Maybe you’ve never seen the need for an adviser – but now you’ve left your job and you want to roll over your 401(k). So you talk to the guy behind one of the desks at your local bank and he tells you, “Don’t worry. I can manage your account for you.”

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    He asks you some questions about risk tolerance and your retirement goals, and then he puts your life savings into mutual funds and tells you he’ll keep an eye on it. And because he always waves at you when come in, you believe him. The thing is, that same week, dozens of other people walked in, too, all with the same rollover needs. And he told them the same thing.

    The system is flawed. It’s physically impossible for that one guy to watch out for every one of those customers and their accounts. So now, instead of having a managed portfolio, you have what we call a buy-and-hold account – or what some people call buy and hope, because you’re just hoping the market does well. You know, the way they did in 2008.

  • A comprehensive approach: If you’re looking for a holistic approach to financial planning, you’re more likely to get it with an independent adviser who’s taking the time to get to know your needs and may be working with a team of professionals to provide more complete services. For example, we have a new client whose husband passed away more than five years ago. When she came to us, we saw that her adviser (who was with a bank) had her completely invested in mutual funds, and her money was split between two trusts. So for five years, she had this accounting nightmare of doing a trust tax return, and she wasn’t able to move forward or invest the money because she didn’t want to create additional taxes for her kids.


    We took her to an estate-planning attorney, who was able to get it all resolved with one meeting – and it cost her just $500 to draw up the document. Because we work under the fiduciary standard, it’s our obligation to look out for the client’s best interests and go above and beyond. (If your financial professional isn’t a fiduciary, you might get that, but it isn’t a legal or ethical obligation.)

  • Unfortunately, we’re kind of stuck in this David vs. Goliath mode in the financial industry, where the average person on the street doesn’t even know there are different levels of advice and attention.

    A lot of that is marketing. All those radio and TV commercials, the golf tournament sponsorships and stadium-naming rights build a brand and get the word out in a way that an independent adviser can’t afford.

    But when it comes to minding your portfolio and your plan, bigger isn’t always better.


    Do your homework. Research online. Ask friends and colleagues if they have an adviser they like. Attend seminars. Don’t hesitate to quiz people about compensation. And interview multiple advisers until you find one that’s a good fit for you.

    Kim Franke-Folstad contributed to this article.

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    Megan Clark is CEO & Executive Wealth Manager at Clark & Associates Inc. Financial Solutions and is an Investment Adviser Representative and Insurance Professional. As a financial adviser, she is passionate about helping families create a holistic financial plan, and she often holds "For Women By Women" informational seminars to reach out and help assist women in pursuing their goals. Clark is a graduate of the University of Virginia.

    Investment Advisory services offered through Brighter Financial Capital Management LLC, a SEC Registered Investment Adviser. Securities offered through Kalos Capital Inc., Member FINRA/SIPC located at 11525 Park Woods Circle Alpharetta, GA 30024. Insurance products and services offered through Clark & Associates Inc. Financial Solutions. Clark & Associates Inc. Financial Solutions and Brighter Financial Capital Management LLC are not affiliated with Kalos Capital Inc.

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    This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.