FEE-ONLY ADVISERS

We are a “fee-only” investment advisory firm which eliminates many of the traditional conflicts of interest inherent to the financial services industry. We believe that if our sole source of compensation is our clients then our loyalty will lie solely with them. There are three primary means for “financial professionals” to be compensated for investment advice, which are commission based, fee-based and fee-only.

Fee-only Adviser:

A fee-only adviser is paid directly by the client and will not receive any other form of compensation on the account. This eliminates any sort of subjective influence from a broker/dealer, insurance company or mutual fund family. It also elevates the adviser’s responsibility to one of fiduciary from suitability. Often, this relationship requires the client to establish their own brokerage account that is separate from the adviser.

Advantages for the client:

1. Adviser acts as a fidicuary legally requiring him or her to act in the best interest of the client
2. Unbaised advice
3. Straight forward relationship void of conflicts of interest
4. Transparent fees and expenses
5. All advisery fees are tax deductible (Assuming they are not deducted from a tax-deferred account such as an IRA)

Advantages for the financial professional:

1. Less conflicts resulting in fewer compliance issues and less paperwork
2. Ability to acquire discretionary authority over clients' accounts which increases effeciency
3. Reduces administrative burden
4. No external pressures from product providers

How can I tell if my advisor is fee-only?

There are several simple ways. The term Registered Investment Adviser should appear under the firm’s name (Adviser should be spelled with an "er" instead of an "or" which signifies that the firm is compensated for advice). An adviser’s business card does not need to include any of the verbage that was listed for the other two business models (see below).  A fee-only adviser will provide you a copy of the firm's ADV, Part II.  Finally, you will need to sign a contract with the Adviser that is seperate from any paperwork your sign with the brokerage firm or custodian of your account.

Commission Based Broker:

Historically, commission-based compensation dominated the financial services industry. This manner of conducting business is wrought with conflicts and we strongly encourage anyone to carefully examine any sort of business conducted with a commission-based broker. A broker compensated by commissions is only paid when a transaction occurs regardless of whether it is in the best interest of the client. Furthermore, the broker is wholly compensated by the Broker/Dealer (B/D), insurance company or mutual fund distributor which is likely to have little concern for the end client.

How can I tell if my advisor is Commission based?

On a broker's business card, website, marketing collateral; it will state, “Securities offered through [insert B/D name here], a Broker/Dealer, Member FINRA/SIPC…”

Fee-based Advisor:

There is a trend towards traditional brokers becoming licensed to charge fees or provide "wrap accounts".  Wrap accounts are cleverly disguised commission-based accounts that charge the account a commission-based on assets under management rather than a per transaction commission.  When a person acts as both the advisor and the broker on an account, a multitude of conflicts are created.  The client should be suspicious of a fee-based advisor that is acting as both the broker and the adviser.  (And if you are a broker, then I'd strongly urge you to move your fee-based business away from your B/D as you are creating an incredible compliance nightmare.)  There are two ways for a fee-based advisor to charge fees which are inside a “wrap” account and inside a “managed account”. In these situations, the firm is paid by two parties, either the broker/dealer and the RIA or the broker/dealer and the client.

There are a few significant issues that can arise with fee-based advisors in addition to the multiple conflicts of interest. A fee-based advisor may not be allowed to obtain Discretionary Trading authority on your account making asset management very tedious. Furthermore, the fees in this type of arrangement may or may not be tax-deductible. It depends on the nature of the contract, type of account and the exact nature of the fee.  A "wrap fee" is typically not tax deductible.  (We are not tax consultants nor do we provide any sort of tax advice.  Consult your CPA before making any decisions regarding how to handle advisor fees.)

How can I tell if my advisor is Fee-based?

If your advisor’s business card includes the same language as a commission based broker and it also includes the following, “Investment Advisory Services offered though [insert name of RIA], a Registered Investment Adviser…”