TOP FINANCIAL FIRMS IN THE CITY, STATE, USA

I recently saw in an advertisement or article on the internet with this type of headline. I am sure you have seen them as well. This one was about Tops in the USA. I saw the firms, and having been in the business for many years I was somewhat surprised. So, I looked at the author’s parameters and would like to comment on each as follows:

“AUM (Assets Under Management): Firms with more total assets under management are ranked higher.” 

I think I understand the reasoning that “bigger is better”, but in my experience that may not hold true. Is this the result of excellent marketing and national advertising or great service and performance? That is the question one should ask.

“Individual Client Count: Firms that serve more individual clients (as opposed to institutional clients) are ranked higher.”

If you are an individual, that certainly is a valid parameter since institutions typically have different needs and objectives than individuals.

“Clients Per Advisor: Firms with a lower ratio of clients per financial advisor are ranked higher.”

An excellent parameter which would infer better attention is given to you and your assets. Only time will tell if that is in fact the case.

“Years in Business: Firms that have been in business longer are ranked higher.”

Another excellent parameter. Experience and long track record prevents using a firm that may have just got lucky one or two years. That said, this is a very dynamic profession and ongoing research and updating of technology are a must. The firm cannot rest on its laurels.

“Fee Structure: Firms with a fee-only (as opposed to fee-based) compensation structure are ranked higher.”

To me, this is always a “cop out.” I know the assumption that anything with a commission is not good for the consumer. That is certainly possible, but so it is fee-only. I know of situations where a fee needed to be justified and changes were recommended that were nothing more that justifying the fee and not necessarily in the client’s best interest. Same with commissionable recommendations. But I can tell you this, there are financial products that are in a client’s best interest that pay a commission and are not available on fee basis.

Bottom line, in selecting a financial firm, look at the parameters and how valid they are for your situation. And remember, it is their level of competence and ability to do the job you require—not their method of compensation.

The advisors here at Virtus Wealth Management are here to discuss this with you along with any questions you may have.  Feel free to give us a call at 817-717-3812.