Does Your Advisor Operate With Independence?
When it comes suggesting financial services and solutions, there is no such thing as 100% independence!
Somebody had to say it! The truth is that everyone has restrictions. I have restrictions.I can’t be a male model. (Too short). Seriously, though, as a retirement strategist, there is no such thing as an advisor scanning the landscape and having every last investment option available to him or her. For example, I can’t sell most Variable Annuities. Also, I don’t have alternative investments at my disposal. (Private placements, real estate, bitcoin…) Further, if a carrier like Northwestern Mutual has a crazy good solution, it’s not available to me.
I also believe it’s self-serving to universally criticize the products or services one doesn’t sell – there are circumstances where every product/service would not be appropriate.
The largest players in financial services are broker-dealers. Names like Fidelity, Schwab, Wells Fargo, Edward Jones, Ameriprise & Voya among many others. Many broker-dealers have restrictions. Many frown on insurance solutions like building wealth with the use of cash value life insurance or income planning through the use of annuities. They have their reasons. Some would prefer to have your assets to manage because of the yearly fees. Others are so big that the thought of training their people on additional lines of business is unappetizing. If they offer these solutions, there aren’t many options to choose from. It helps to know the restrictions.
Questions to ask any potential advisor:
Are you limited in the types of products and services you can offer? If the answer is yes…
What are you prevented from suggesting to me?
Based upon limits your limits, what circumstances/problems can or cannot be solved or addressed?
What does it mean to be compensated based upon transaction vs. fixed fee or percent of assets?
What investment solutions are at your disposal?
Everybody is conflicted in some way. Every financial professional's hands are tied in some way. Your job as a consumer is to know your advisor's restrictions. The point is if he or she says..."That (insert any financial solution) is a bad idea, you MUST know whether it's a bad idea because he or she is prohibited from considering it for you...or truly is just and awful idea.
As you know, I believe you CANNOT have SECURiMENT without the help of an insurance company. I say that in class and when we meet. I say it all the time. Even to my sons who don’t care what I say. To that I have set myself up to be a independent as humanly possible. Call it 99.9432432342% independent. Yes, pretty close to 100%, but not all the way there. If you are receiving guidance from someone who is overly restricted, then you aren’t getting the whole picture.
That's just the way it works!