Why You Should AVOID Investment Firms & Big Banks For Financial Advising

Experience matters when you’re looking for a Financial Advisor. But what kind of experience, and at which companies? 

Suppose you meet with two advisors and both have 30 years of experience. How do you choose? You need something more than just years of experience alone to identify the very best advisor for you.

As for which company the advisor gained that experience, here are three reasons to be careful entrusting your financial future to advisors at big investment firms, discount brokers, and big banks.

1. Expertise is not as deep as promised

There are some true financial management experts at these firms. But these are also the places where most young advisors get their first jobs to learn their craft. These younger advisors are trained by their supervisors to do what’s in the interest of the company. When they give you advice, this does not come exclusively from their own experience.

But yes, some experts do work at these places, and if you work the system right, you can find them. But there’s something else to keep in mind. The experts at these big firms are not fiduciary RIAs (Registered Investment Advisors). They are brokers and dealers. Brokers and dealers work on commissions and make money on the bond spreads.

These firms may also promise a bunch of ancillary services too, such as estate planning attorneys, CPA accountants, and tax advice.

The experts in those industries do not work for investment firms and discount brokers. They run their own businesses. When you are promised all these extra services, don’t be deceived into thinking you’re getting the best from every industry. You’re not.

2. No personalization 

Most big firms have huge caseloads. And they don’t customize a plan for you most of the time. They funnel your money into the same investments as everyone else. They created a swath of investment plans before ever meeting you, and they fit you into the pre-designed plan they think is best.

In other words, they choose an investment product for you, and that might include boilerplate software that most certainly does NOT have your best interests in mind. 

3. Doing Their Supervisors’ Bidding

These advisors are doing what they were trained to do, not necessarily what’s best for you. 

Do they think about costs like taxes incurred from short term capital gains? 

Do they think about what happens to your money if your goals change? 

Are they making investment decisions based upon the groundless assumption of an 8% annual gain? 

Then they are not operating as a fiduciary advisor. 

The duality of serving you and serving their company could at times lead them to use investment strategies that may not be in your best interests. That’s non-fiduciary. Again, these advisors are what the industry calls a ‘broker-dealer’, which is a different class of financial management whose standard is to provide you with ‘suitable’ investment choices, as opposed to what’s best for you.

It’s a very different set of standards.

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That does it for part 1 of our series on “7 Reasons To Avoid Big Investment Firms, Discount Brokers, & Big Banks.”

Part 2 will be out soon, with 4 more reasons to keep in mind.

For more in-depth tips on choosing financial advisors and securing your generational wealth, click below to download our free ebook:

“The Ultimate Guide To Choosing The Best Financial Advisor For Investors With $3 Million To $70 Million In Liquid Assets”

In case financial security and serenity are on your mind and you’d like to have an honest, no-nonsense or selling involved, chat with an unbiased fiduciary expert then feel free to reach one of Pillar’s co-founders, Hutch Ashoo or Chris Snyder, at 1(800) 669-6780.