Advantages Of Independence

Working with a fully independent financial advisor can be a bit different than working with a large financial institution. There are fundamentals which apply to both relationships; however, working with an independent financial advisor has aspects an investor may find of value.

What both relationships share

Regulation. Both types of financial professionals must have appropriate registrations. Both solicit and receive compensation for their work. These regulations require they be registered with a brokerage firm. Both professionals have to complete annual continuing education programs and have compliance inspections and reviews by the brokerage firm where their registrations are held.

Offering investment products. Both types of investment professionals offer investment products and services that are approved to be sold by their brokerage firm. This in no way assures the performance of a particular investment or implies any guarantee of performance.

Where independence can differ

Flexibility in fees and commissions. Independent financial professionals tend to have flexibility in how they can charge for their services. Even though they may offer the same financial products as a larger firm, they may have flexibility in how they can charge commissions or asset management fees.

Broader product choices. Many independent advisors have access to different investment products and are not held to a particular firm’s product line. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.