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Independent financial advisors - from the eyes of a retired bank executive

on Thu, 05/18/2017 - 21:40

This post was written by a client whom l met close to a decade now. She was an executive at a major Canadian bank and she is sharing her insight on independent financial advisors verses bankers. - And, the last line of thank you note was totally a surprise!! :D

Finance, a word that we read and think about often.  Yet, when it comes to making choices for the one thing closest to our hearts, money, most people feel totally bewildered and lost.  The question that begs to be answered then is, does everyone need the services of financial advisors.  What exactly are the benefits of having someone else deal with our most important asset.   

In today's world of easy information and instant gratification, the role of the financial advisor can become very confusing.  After all, we can easily access online applications which with one easy click of the mouse will spit out sample portfolios we can follow.  Does this really constitute the way we should be dealing with an asset that everyone requires to live a decent and comfortable life?  The cookie cutter approach?  Arguably, this will work some of the time for some of the people.  Having spent many years in the financial world, I would personally not be comfortable with this approach.  

So the next question is, how do you pick a financial advisor?  Every financial institution has some variation of a financial advisor available to their customers, and then we have the independent financial advisors.  The choices are difficult to make on the surface.  On the one hand with the advisors attached to the big institutions, you have the perceived security of the backing of the host institution.  Also there is the comfort in knowing that these advisors are regulated by a host of rules and regulations as imposed by the Government on the large financial institutions.  Freelance or independent advisors on the other hand seem to have the freedom to work at their own pace etc.  

What one forgets however, is that all financial advisors are governed by mostly the same rules when it comes to customer information and financial dealings.  The independent financial advisors work with the very same institutions that we deal with on a daily basis.  The main difference being that they have the freedom of picking the one that best suits their clients portfolios, without the obligation of using just the institution they are working for.  There is the freedom to go outside of the host institution to find products and services that are mutually beneficial to the customer and advisor.  Are there "rogue" advisors out there, absolutely.  

Do your due diligence when looking for a good financial advisor.  It is your money and you need to always be aware of where and how it is being invested.  Review your monthly/quarterly statements carefully. 

One often hears that Independent financial advisors work for their own benefit, often at the expense of the clients.  The most important thing to remember in the face of this argument is, the kind of returns you are earning from the proposed wealth plan and if it more than offsets the commissions and fees charged.  The independent financial advisor is not paid by any one institution and as the saying goes 'only eat what they kill'.  They are providing a service for which they should rightly be paid.  In the same way the financial advisors within financial institutions are also paid for their services.  The main difference is that their commissions and fees are better buried under blanket "service charges" which we accept as just normal "bank charges".  

My own portfolio was previously with the institution where I was an executive.  The portfolio barely grew in the more than two decades in that environment.  The positive and double digit return since turning over the portfolio to Mimi, over the last ten years is nothing short of fantastic! 

Personally, I have found an independent financial advisor that I can trust and one who works very hard at finding new and different products to suit my needs, thank you, Mimi Lee (TruFinancial). 

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