Investment Basics

Wealthy clients who require advanced investment planning and wealth management services should be concerned the next time they talk to the financial advisor at their bank, or the broker at the big Wall Street firm. Concerned that is, if they value independent and transparent advice on their accounts and wealth management plan. When it comes to providing affluent clients the types of services they need most: investment transparency, elimination of conflicts of interests, fiduciary responsibility, independent financial information, accountable compensation structures, these companies fall short on all of the above. Hidden fee share arrangements, high commissions, pay to play investment products, no fiduciary responsibility to the client and firm reviewed policies on what employees can discuss all play a very critical role in diminishing the affluent client's ability to get transparent and accountable advice.

Many large private clients have much too much wealth to be advised by a bank, where the average account size is rarely above a few million dollars. Besides the obvious conflicts of interest that banks have, another concern for affluent investors is the inability of these companies to build sustainable advisory teams. Big banks and Wall Street firms do not want to build dedicated teams of highly qualified advisers. It is expensive and an administrative headache. Plus, the top financial talent usually does not want to work in a captive-firm environment, where profit margins are cut and turnover is high.

Another big concern with banks and big Wall Street firms is of course, conflicts of interest. How can a company provide independent advice when they have their own products to sell? How can an adviser provide independent advice when they are paid a commission by a third party to place its products, or are paid more when they trade more? What affluent clients really need a bank or big Wall Street firm for is asset custody and borrowing money. Investment advisory is a very tricky business for them, because they are not held to a fiduciary standard for their clients, they are not required by law to place the client's interests above their own.

That is where a true investment fiduciary can help. A fee only Registered Investment Advisory (RIA) firm functions much differently than a traditional Wall Street firm or bank. A fee only Registered Investment Advisor does not manufacture any products in house and has no ties to any institution or investment products: Not a single investor should be a shareholder in the business and the firm should not be affiliated with any asset managers. This guarantees total independence in the choice of investments and fairness in the allocation of opportunities. Fee only advisors are only paid by their clients and pass savings onto them. A quality fee only RIA firm should provide affluent clients with a step by step and very thorough process that systematically explores their complete financial picture and outlines a true wealth management plan that best suits their needs.

Tony DePasquale is the President of Elysien Private Wealth & Real Property. An independent forensic investment auditing & advisory firm headquartered in Henderson, Nevada. Tony can be reached by email at tony@elysien.com or through the company web at http://www.elysien.com