These past several years have really thrown people for a loop. For many, their plans simply came unraveled and it meant serious disruptions to their retirement efforts, possibly even a long term delay in their ability to retire at all. That's why it's so critical to understand, not only your plan and your investments, but your own financial advisor. In fact many decisions you make today will effect you and your family for years to come. The importance of constructive, knowledgable, and yes, independent advice is becoming more sought after for many retirees.
So what is an independent financial advisor? Well let's start with a better understanding of “captive” advisors. Captive advisors work more like an employee of the firm. Many times these firms make their own investment or insurance plans known as “proprietary products”. Why would a company hire a “captive” representative? The answer is simple – to promote the sale of their “proprietary investment or insurance products”. Unfortunately the best way to describe this relationship, is like trying to fit a square peg in a round hole. Though their products may be suitable, they may not be the best solution available for a client's situation. Not to demonize these advisors, because many times their position with the firm has been a wonderful opportunity for them to grow their practices. In fact my start in this industry came as a captive advisor but ultimately lead me to leave the comfort of being captive and take the less known path of independence.
This still leaves us with the question, so what is an independent advisor? Interestingly, there may not be much at all that's different between the two. An independent advisor may still have a large firm they work with, but are not considered employees of that firm. Instead they are treated more like a subcontractor but fall under the same scrutinty and legal obligations as captive advisors with regards to the financial regulatory industry. However, in my experience, independent advisors are not beholden to their firm. They have far more freedom to work on behalf of their clients, helping them identify the best, most appropriate investment or insurance products available. But just because someone is an independent advisor, certainly doesn't mean you should blindly trust them, either. I'm sure there are plenty of independents and captives out there that are more interested in their own financial gain than that of their clients'. Either way, ask your advisor questions. Know that there are potentially many solutions to any problem and if you've second guessed the advice you've been getting from your advisor, as you read this, then please call our firm for a complimentary second opinion.
“At Savannah Court Financial Advisors, Inc. you're not just a client, you're our guest!”
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Scott Weidman, CFP® is a local, independent Certified Financial PlannerTM Professional. He has been serving his client's retirement and investment needs for over 14 years and owns and operates Savannah Court Financial Advisors, Inc. located at 157 Fairview Avenue, Daytona Beach, Fl 32114.