Like other small business owners, an independent financial advisor isnât an employee of large corporate firms. Their independence can be a benefit, and there are few reasons that you prefer working with this type of advisor. However, there is no one-size-fits-all solution and a larger firm may be a better choice for some people.Â
Advice Built Around You, Not a Big Firmâs Bottom Line
At big institutions, financial advisors are employees of their firm and have to take direction from the top. In many cases, they have sales targets or have pressure to pull from specific product âshelvesâ. That can lead to recommendations that reflect a firmâs internal priorities, or an advisor’s need to meet a quota, more than your personal goals.Â
During my initial training at the corporate office for my first advisory job years ago, all the newly hired advisors from across the country were in a large stadium style auditorium learning about different service models. The trainer told us explicitly that we should consider our need to meet individual revenue targets when deciding on which service model to recommend. It wasnât just that a conflict of interest existed – we were being taught that it should be a driving factor in our decisions.
Independent advisors donât HAVE to work that way. As small business owners, they answer directly to their clients and are often legally bound to a fiduciary standard. Whether it’s choosing investments, creating a retirement strategy, or helping you navigate a major life change the advice is shaped by your values, not someone elseâs agenda.
Independent Financial Advisors have Fewer Clients and Deeper Relationships.
Large firms often focus on scale to drive corporate profit â more clients, more assets, more revenue. That can leave advisors stretched thin and their clients feeling like a number. It’s common for advisors at large firms to have several hundred clients.Â
Independent advisors typically take on fewer clients by design. As small business owners, their client relationships are deeply personal and important. They can offer the kind of attention and care thatâs harder to find in a volume-driven environment. Itâs about building a personal relationship where you are seen, heard, and feel supported over the long term. That kind of connection cultivates more thoughtful conversations, more proactive planning, and more confidence in the decisions youâre making together.
Regulatory Oversight and Security
Independent firms must comply with regulatory requirements of either their state securities board, or the Securities and Exchange Commission. They are also subject to routine on-site inspections by their regulatory body.
Independent financial advisors typically contract a brokerage firm such as Fidelity or Schwab to act as a custodian, giving them the same mechanisms to open accounts, place trades, and handle money as larger firms. We utilize Altruist, a firm that only provides services through independent financial advisors.
Think of a financial custodian like a vault and record-keeper rolled into one. They protect your money and investments, process trades, send you statements, and handle things like dividends or interest payments. Custodians also ensure your assets are accounted for and separated from other clientsâ holdings.Â
They donât make investment decisions or offer advice (thatâs your advisorâs role); instead, they focus on securely holding and tracking your assets. The advisor manages your strategy, and the custodian handles the secure storage and processes transactions. This separation is a good thing because it adds a layer of protection.
How Altruist supports Independent Financial Advisors
