Broker Check

Why We Are NOT Like

Most Financial Advisors

 

 

With more than 300,000 financial advisors in America, why is it so hard to find good advice?

 Because 60% of advisors aren’t even required to act in their clients’ best interests.


Certainly, there are many honorable, well-intentioned advisors who may not meet all these criteria. And this data is not an exact science, just a directional aggregate of trends. But, what makes these criteria important is that, together, they can help significantly increase the ability of advisors to create a better wealth experience for their clients. 
  
Here are some of the reasons why…. 
  
Of the 302,000 financial advisors in America, only about 122,000 are Independent Advisors with a fiduciary duty to their clients. These advisors are not required to sell any particular products or services to satisfy a sales goal or company mandate. And as fiduciaries they must put their client first and act at all times in the best interests of each client. This is important because financial advice should never be compromised. 
  
But many independent advisors are still selling commission-based products, which can lead to conflicts of interest, even if unintended. Only about 77,000 independent advisors are primarily Fee-Based or Fee-Only, meaning they receive the majority of their compensation from client fees. They are paid for advice, not for the sale of a financial product (except for some products such as life insurance or long-term care policies) and prosper only as their clients prosper. 
  
Of the 77,000 fee-based/fee-only advisors, about 46,000 are Financial Planners/Wealth Managers — meaning they take a holistic, comprehensive planning approach and address a full range of financial needs beyond investment management, including tax management, retirement income planning, estate planning, etc. Many may hold advanced certifications such as the CFP. 
  
Of these advisors, about 16,000 usually invest primarily in Passive Investment Vehicles — they don’t spend time and client money trying to beat the market (an almost insurmountable challenge as studies, such as those done by SPIVA, consistently suggest). And they don’t recommend expensive, complicated products. However, we know that there are still some drawbacks to many passive products — such as index funds and ETFs — including lack of internal trading flexibility and imprecision. 
  
Only about 5,000 advisors (less than 2% of the total) follow an Asset Class Investing approach, based on almost nine decades of data, analysis and research, insights from behavioral finance and close relationships with leading academics. Many, but not all, of these advisors work with Loring Ward and our partners. Some may even be working on their own or even with competitors, so the 5,000 is a rough approximation. But what makes these advisors special is that they don’t follow fads or relegate their clients’ futures to guesswork and speculation. Instead they embrace exposure to the factors of return and the long-term growth potential of markets around the world.

If you have not yet embraced all these critical criteria, working with a partner like Loring Ward can help you continue to evolve and grow your practice and provide what your clients want and need. For more than 25 years, we’ve helped advisors across America stay ahead of change and deliver a better wealth experience. 
  
If you are one of these 5,000 advisors, it is pretty clear that you really are different. And your clients are so fortunate to work with you! 

 

Loring Ward – Advisor Insights