When it comes to securing your financial future in Boca Raton, finding a trusted financial advisor who will become your partner and put your interests first is essential.
As you explore the numerous options available, from financial advisors to wealth managers, ensuring they adhere to a fiduciary standard becomes paramount. Following fiduciary standards will help provide unbiased financial advice tailored specifically to your needs and goals. Whether you’re new to financial planning, planning for retirement, receiving equity compensation, tax planning, seeking wealth management solutions, or simply looking for unbiased financial advice, knowing how to choose a fiduciary financial advisor in Boca Raton, FL, can make all the difference.
If you’re looking for a financial advisor in Boca Raton, it’s important to understand the options you’ll find, how they differ, and why a registered investment advisor (RIA) can prove advantageous, especially for high-net-worth individuals.
Understanding Your Choices
In the South Florida market, you’ll find a variety of types of institutions that provide investment advisory services. They range from large banks with separate investment departments (like Chase and Bank of America), to major brokerage firms (like Merrill Lynch and Morgan Stanley), to investment firms that focus on ultra-high net worth individuals (like Goldman Sachs), to independent advisory firms, often referred to as RIAs (registered investment advisors).
It’s common for high-net-worth individuals to gravitate toward the larger banks, brokerage houses, and investment firms under the impression that they’re the only professionals that have experience with large portfolios and the range of capabilities it takes to manage them. The prestige and name recognition of a large firm may be enough to lure individuals to entrust them to help grow and manage their wealth.
Independent investment advisory firms are much less common in the Boca Raton market, although they’ve taken hold fast in other areas of the country. Many high-net-worth individuals aren’t aware that independent firms exist in South Florida or how they differ from other types of advisors they may be familiar with.
A Look at the Key Differences
While there are several differences between brokerage firms, banks, and independent investment advisory firms, the two most fundamental and impactful distinctions are their compensation models and the degree of financial planning provided.
Compensation Model
While it might not seem important to you at first glance, an advisor’s compensation model has a direct impact on how they serve you.
At most large brokerage firms and bank investment departments, advisors are paid a commission on the financial products they sell. Those products might include mutual funds, annuities, insurance, and alternative investments such as hedge funds, limited partnerships, and private equity. The senior management team sets sales quotas for various financial products each month or quarter, creating downward pressure on the “advisory” team to focus greater attention on those products.
In contrast, many RIAs in the Boca Raton area are compensated on a fee-only model, with no commissions involved. They may charge you a flat or hourly fee or, most commonly, a fee based on the amount of your assets that they manage. An RIA also has a fiduciary responsibility, which means they’re obligated to provide investment advice that is always in their client’s best interest. Brokers, on the other hand, are held to a lower “suitability” standard which requires only that investments be “suitable,” not necessarily in your best interest.
Because they’re not paid based on the financial products they happen to sell, a fee-only RIA is not incentivized to recommend particular investments. That removes the risk of their objectivity becoming clouded by their own short-term sales objectives.
Degree of Financial Planning
The compensation structure of a large brokerage firm or bank investment department can have a significant impact on the degree of true financial planning you do (or don’t) receive.
When advisors are paid for selling the products at the top of this month’s priority list, their focus can be skewed away from your specific financial situation and goals. There is often less incentive to spend the time and energy to truly understand what you want to accomplish in life and create a personalized roadmap to get you there. Instead, the arrangement can become transactional. In fact, when Team Hewins advisors meet with clients who’ve previously worked with a brokerage firm or large bank for their investments, we find their portfolios often include investment types that don’t reflect their goals or situation.
At an independent advisory firm, including those in South Florida, the focus is much different. Because they’re financially invested in each client’s success, good independent advisors take a relationship approach.
- They view job one as working to understand you and your goals, so they start by asking you lots of questions.
- Once they have a good grasp of who you are and why you want to invest, they craft a personalized financial plan to help you get there.
- The investment choices they recommend are one part of a larger, strategic plan that includes planning for cash flows, taxes, insurance, estate issues—and yes, investments.
- Just as important, your personalized financial plan is not static– your advisor proactively discusses and adjusts it as life takes its inevitable twists and turns.
While the compensation model and degree of financial planning offered tend to be the main distinctions between large brokerage houses or banks and smaller, independent firms in the Boca Raton area, other differences can impact the level of service you receive.
For example, it’s common for each advisor in a large firm to be assigned many clients (so they can generate a large volume of product sales), which limits the time and energy they can spend working with any one individual. RIAs may work with a smaller group of clients that they view as a good match for both parties, ensuring they can provide the attention that proper financial planning requires.
Another key difference is whether there is a critical separation between the custodian of the investment account and the financial advisor. With a brokerage firm, the client’s funds are housed within the same firm the advisor works for, which can limit the investment choices. As independent firms, RIAs typically hold their clients’ funds in a third-party brokerage firm, where there is more choice and added layer of protection.
More to Explore
Additional Resources that will help you find a Financial Advisor in the Boca Raton, FL Area:
Finding the Right Advisor in Boca Raton
For high-net-worth individuals in the Boca Raton area who are looking for an experienced financial advisor to help them achieve their life goals, Team Hewins may be the right choice.
As an RIA, Team Hewins has a fiduciary obligation to put your best interests first and to always operate free of any conflicts of interest. Our CERTIFIED FINANCIAL PLANNER® professionals take a holistic approach to financial planning, following a disciplined process that starts with learning about you, what you want to achieve, and how you envision your future. Then we develop a personalized, comprehensive financial plan that offers practical recommendations on how to handle cash flow, tax, insurance, investment, and estate planning issues—and we discuss the plan with your regularly to ensure it always reflects your current situation and goals.
Ready to partner with a Boca Raton financial advisor that can help you maximize your wealth? Contact Team Hewins to schedule an introductory call.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein. Certain information contained herein constitutes forward-looking statements. Team Hewins does not guarantee the achievement of long-term goals in the portfolio review process. Past performance is no guarantee of future results, and a diversified portfolio does not guarantee a positive outcome. Nothing contained herein may be relied upon as a guarantee, promise, assurance, or a representation as to the future.