There are so many things to consider when hiring a financial advisor – competence, experience, ethics, objectivity & independence, etc.  The list can be quite long, depending on your specific needs.  Many people have put location at the top of their list.  But should that really be key criteria? Is it absolutely necessary to choose a local financial advisor?

The short answer is, yes and no.  Here in the 21st century, with all the advances in technology and communication, you can find suitable financial advisors located all over the United States. They could be just down the block, across town, or on the other coast.  Today, most firms are equipped with the technology and know-how to interact with clients regardless of where they are located. Being local isn’t a real issue, and it’s not really the right question. Here’s the question you should really be asking yourself.

Does Hiring A Local Financial Advisor Matter?

The real question is not about location.  The difference between a local financial advisor vs. a national financial advisor is really a difference between a professional service-oriented approach vs. a detached product-driven approach.  Consider the poster child for a large national firm:  Bank of America.

Bank of America’s financial advice unit includes both Merrill Lynch – itself one of the former behemoths of the brokerage world – and U.S. Trust.  Altogether, they oversee roughly $2 trillion in client accounts, handled by 16,000+ advisors.  Common sense should tell you that the odds are slim to none that one of their “financial advisors”, or “relationship managers”, will actually stick around long enough to develop a thorough plan and then actually make that plan work over time.

Advisors who join the ranks of these corporate dinosaurs are deciding to jump on the career advancement treadmill.  Anyone who is really good at Bank of America – or any of the other large national firms – is looking at how to get that next promotion.  Whether it’s 6 months or 3 years down the road, the odds are they will be gone, and you’ll be introduced to someone new who just got promoted to handling your account.

To avoid this, we recommend that you choose a professional and service-oriented financial advisor.  They may be a local financial advisor, or they may be on the other coast.  A professional service-oriented advisor offers several significant benefits which just cannot be provided by the large national firms.

Extraordinary Individual Service

This is a bit obvious from what’s written above, but it does bear some repetition.  Truly independent financial advisors are much more likely to be focused on you and your needs.  They’re not concerned with the next 3 to 5 steps on the corporate career ladder.  They’re close to you and can take the time to address your needs and requests.

Objective Independent Advice

Most “advisors” at the large national firms will receive part or all of their compensation based on selling you a product, whether it’s a stock, bond, mutual fund, insurance policy, or annuity.  This creates an inherent conflict of interest.  The securities laws in this country recognize this fact and hold these “advisors” to a lower standard.  It’s called the “suitability” standard, and it means they only have to consider whether the products they sell are generally suitable for your broad investment profile.

The highest standard is the “fiduciary” standard.  The independent advisor who agrees to meet this standard is legally required to place your interests first at all times.  These advisors never sell a product, take a commission or do anything else which would create a conflict of interest.  They weigh all the factors in your situation before making any recommendation.  Their advice is 100% objective.  Whether you hire a local financial advisor or not, we strongly believe that what matters most is that they are objective and put their clients first.

Holistic Comprehensive Advice

Because the professional service-oriented firm is taking the time to get to know you, they can offer a holistic approach.  They see planning as an integral part of their customer service, not just as a loss-leader to bring people in the door.  This most often leads to smarter planning, which can significantly improve your long-term success.  A Morningstar research report titled, “Alpha Beta and Now… Gamma”, analyzed the difference that smart planning can make.  While not all clients or situations are the same, the report noted that retirement incomes can be improved by 29%.  The reason is that a comprehensive advisor is looking at all the areas which affect retirement income – your investments, pensions, social security, expenditures, tax exposure, etc.  It’s not just about investment returns.  It’s about being smart with everything you have.

Recommendations Tailored to Your Specific Situation

The large national firms are set up to standardize advice and product recommendations. They then sell those to as many people as possible.  If each “advisor” working for these national firms has to thoroughly analyze each client’s situation before making recommendations, there’s no way the firm can achieve economies of scale and multiply profits.  By forming recommendations based on an understanding of the “typical” or “average” investor, these national firms can drive profits.  Unfortunately, this doesn’t drive your success.

The professional service-oriented firm is in a much better position to tailor the recommendations to exactly what is needed in your situation and for your goals.

You Can Have A Say In What Happens To Your Money

If you are willing to hand your money over to someone in some far-off state (or even someone in your state) to invest as he or she wishes, with little input from you, well…, choosing a national firm might be the right choice.  In order to obtain the profit margins they need, the large national firms aren’t set up to have detailed conversations with you about how your money is to be invested.  They want to make one decision and implement it across several thousand accounts without having to get your permission ahead of time.

The independent advisor doesn’t have to do this, and the best ones actually want you to be involved.  They want to become part of your professional team which works to achieve the goals that are important to you, and they want to make sure you understand why their recommendations will help you.  If you want to have a say in what happens to your money, choosing an independent, professional, service-oriented advisor.

Meet With Your Local Financial Advisor

There is one key benefit of having a local financial advisor. Choosing a local financial advisor allows you to actually meet the person who will be giving you advice.  The national firms can’t afford to do this.  Even if you’re comfortable conducting business online, there will inevitably be times when you want to meet and have an honest talk with, the person who is giving you advice.

The large national firms tend to divide their workload into separate departments.  In these large firms, your “advisor” is more likely an account manager who serves as a buffer between you and some other people in a back office who actually do the work.  Your “planning” likely comes from the planning department;  your investment analysis likely comes from an analyst who is detached from what’s really important in your life, and those actually implementing the strategy typically see you as just a bunch of “buys” and “sells” they execute each trading day.  You’re just not going to be able to meet with a true “advisor” because those duties have been split amongst several people in different offices.

On the flip side, you should be able to meet with an advisor if you select an independent service-oriented advisory firm.  Here at First Financial Consulting, we don’t have “account managers”, “planning departments”, or other divisions which separate your advisor from your situation.  Instead, we have independent, objective advisors who are fully committed to, and involved in, achieving your goals.  If you want to drop in personally to meet with us, we encourage it. If you want to schedule a video call or phone meeting instead, we’ll accommodate that as well.  But you have a choice, and you get to decide what’s right for you.  Again, hiring a local financial advisor isn’t necessary, but for most, meeting face-to-face carries with it a world of benefits.

We Recommend You Choose An Independent, Service-Oriented Advisor

In conclusion, much of this should not come as a surprise.

  • We pride ourselves on maintaining our independent objectivity and on providing exceptional customer service as we work with you to achieve the goals that are most important to you.
  • We believe this is critical to your success.
  • We take the time to get to know you and give you the opportunity to get to know us.
  • We design financial and investment plans which are specifically tailored to your needs.
  • We work very hard to make sure you understand your plan and have the highest confidence in its ultimate success.
  • Then we stick around to implement the plan and to make sure you achieve success.
  • We are a group of caring people working with clients who care about their families and futures.

The question is not about the location of the advisor;  it’s about the dedication of the advisor.  If you want to work with someone who is dedicated to serving you, we would love to schedule a chat or a time to come in to meet us.  There are never any high-pressure product sales, and never any smoke and mirrors.  We offer straight talk about what’s important to you.  Let us know if you want to begin a conversation.

 

626-844-4630