By: Frank Armstrong
By: Frank Armstrong, III, CFP®, AIFA®
Now that Wall Street’s giant Investment Banks have proved themselves hopelessly corrupt, colossally incompetent, and spectacularly insolvent it’s important to understand your options. Investors have every reason to be concerned about their financial institutions. But, there is an alternative. You don’t have to take it anymore.
Investors can better obtain advice, custody, and products through Fee Only Independent Registered Investment Advisors. While these advisors may be small in comparison to their better known “wire house” competitors, they carry none of the odious baggage Wall Street has become synonymous for. As a result, they are rapidly gaining market share among informed investors.
Advice: The only way you can insure that you are getting objective advice is to remove the conflicts of interest and fully disclose all sources of income. It strains credibility to believe that a commissioned salesman incented to sell a profitable product for his employer can always have your best interests at heart. To simplify the choice facing the broker, let’s imagine a very conservative prospect wishing to invest $1,000,000. One choice might be a Treasury Bill; net commission $25.00. At the other end of the compensation spectrum, another choice might be a deferred annuity; net commission $120,000.00. In an atmosphere where commissions and conflicts of interest are seldom disclosed, the potential for mischief is enormous. Bad advice can be very expensive indeed.
We all know that a pure heart and an empty head are not enough. There is no substitute for competence. So, many Fee-Only Independent Registered Investment Advisors have assembled formidable talent rivaling or exceeding the name brand institutions. You should always consider your advisor’s education, experience, and professional credentials before entrusting your hard earned money to them.
Custody: You can’t keep your securities under the mattress. So, a financially solvent custodian to provide safeguarding, record keeping, tax information, clearing, and order execution is essential. The markets are interesting and challenging enough so that you don’t want to wonder if your brokerage house will survive. Yet the big Wall Street firms’ capital markets divisions jeopardized their financial integrity by recklessly betting on exotic derivatives and huge leveraged positions in junk mortgages. Prudence and fundamental risk management were trumped by greed and hubris with the inevitable catastrophic outcome. In the process they proved conclusively that not only are they not fit custodians of your funds, they don’t even know what they own themselves. Now they are little more than wards of the state.
Few Independent Fee-Only Registered Investment Advisors custody assets. Instead, they most often utilize the services of America’s large discount brokerages. These brokerages are household names but do not have capital markets divisions making risky leveraged bets for their own accounts. So, their financial stability is not imperiled. Rather, they stick to their knitting of custody, clearing and order execution for their customers. In each case a large part of their total business is providing institutional services for the clients of independent advisors. Importantly, there is no financial compensation between the advisor and brokerage house. The clear separation between the advice and brokerage functions is the investor’s best protection against tainted advice.
Product: Even great advice would be of limited value unless it could be executed with outstanding financial products. Here the Independent Advisor has a huge advantage over the Wall Street giants. The advisors have access to an almost unlimited menu of institutional class product choices to construct true open architecture solutions tailored to the client’s unique needs. With no conflicts of interest and no sales quotas or institutional pressures, the advisor is free to select best of breed products for every asset category.
True institutional class, no-load, no commission products typically provide enormous cost savings when compared to retail products distributed by the Wall Street denizens.
The Alternative: Investor Solutions is a Fee-Only Independent Registered Investment Advisor. We sell only investment advice and management service, and we assume fiduciary responsibility for each and every account. We believe our structure yields enormous advantages to our investors in both quality and price. Compare our professionals, products, costs and services with any other organization and we think you will agree that we are a viable and preferable alternative to business as usual on Wall Street.
You don’t have to take it any more. If you are fed up with Wall Street, and you have investible assets of at least $1 million, call us today for a no obligation confidential discussion of your investment needs.