The Misconceptions of Independence- Volume 1

“Is my client’s money safe?"

When I first joined Integrated Wealth Management this was the most common question I was asked. “Erik, if your job is to get advisors like me to move to an independent firm, how do you expect our clients to go from my current BIG firm to an Integrated Wealth Management ‘account’?” At first I was confused as to what they meant by “account.” Then I realized they thought the client’s money was held in an Integrated Wealth Management account (and that wasn’t as safe as their BIG firm’s accounts.) I quickly helped them understand our clients’ accounts were not held in an Integrated Wealth Management account, but rather at Charles Schwab. Most were shocked and slightly confused. My reply to them was “Do you think a Schwab account is as safe as your current firm’s account?”

I think the safety of a client’s money is the biggest misconception of independence because of a lack of understanding on what it means to be independent. In the purest sense an independent advisor has the choice of where they custody client assets. The custody options for your clients are endless, with some of the more popular being the large institutions and brand names that most clients know. (Schwab, Fidelity, TD Ameritrade, Pershing, etc.) The advisor also has the option to use more than one custodian. This gives the advisor the greatest flexibility to run their practice the way they want. The custodian works to get the advisor’s business because they understand the advisor has choices. This is important to understand because this puts the advisor in the best position, which ultimately puts the client in the best position for pricing, service and overall transparency.

I completely understand the initial thought process advisors have, as described above. The concern for many advisors is that their clients “know” their firm and if they go independent there may not be that “brand name” recognition. Sure, you will find plenty of smaller, less well-known institutions to custody client assets, but you also have the large ones I mentioned above. Depending on the type of advice you provide you can find yourself with an independent firm or broker/dealer that limits your options. We had the same concerns you do, which is why at Integrated Wealth Management we have chosen to use Charles Schwab for over 20 years. Our clients get Schwab statements monthly. We believe the brand name of Schwab provides a similar peace of mind that they would experience with larger wirehouse firms.

 If you have any questions on this topic, please feel free to reach out to me anytime. Stay tuned for the next misconception of independence.

Sincerely,

Erik Mora

To learn more about our client experience, please visit www.IWMgmt.com

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