Most financial planners work within a corporate environment for massive broker-dealers or insurance companies. Within those structures, the best interests of the client often come second to the firm’s desire to maximize profits. Public shareholders, a corporate board of directors, and multiple levels of managers all add layers of influence that may detract from an advisor’s ability to provide conflict-free advice to clients. Because every member of the New Jersey Financial Advisors Network works for (or owns) an independent firm, we are free of such complications.
As independent financial advisors, we work for our clients rather than for a corporate entity. Our loyalty is to our clients, and we adhere to a strict fiduciary standard while serving them. Meeting sales quotas or following the dictates of indifferent managers do not taint our decision-making. We are incentivized to keep our clients by providing stellar service.
Since we are not affiliated with any financial product providers, we are not limited to a specific list of investment or insurance products to recommend clients. We are free to suggest a much broader range of solutions, which may not even include the sale of any financial product at all.
This freedom results in better outcomes for clients.
Across the financial advising industry, there tends to be a tremendous amount of employee turnover. Many of the large firms hire financial advisors in large groups, throw them right into the fray after receiving minimal training, and keep the few who generate enough revenue to keep their jobs. Most of them end up leaving the industry entirely. Even among those who do survive, it’s not uncommon for them to switch firms every few years to earn more money elsewhere.
If clients decide to stay with an advisor who’s switched companies, they will likely need to go through the arduous process of moving their accounts over. They may also have to alter some of their financial plans to fit within the offerings of the new firm. If clients decide not to stay with the advisor, then they’ll either be “orphaned” at the old firm (and no longer receive dedicated service) or they’ll have to start from scratch building trust and a relationship with a new advisor.
Working with an independent financial advisor does not guarantee that they will stay in the industry or at their current firm, but smaller independent firms tend to have much lower turnover and train their employees much more thoroughly. Moreover, much of this training will be oriented towards effectively serving clients rather than just fulfilling sales quotas. This gives clients the opportunity to develop deeper relationships with their financial planner, and a greater degree of trust.
Financial advisors at large firms are provided with specific tools and software to run their office and serve clients. They often have strict policies against advisors using unapproved outside tools because the firm pays for (or develops their own) software that needs to be visible across the company, work well with other parts of their operation, and be applicable to the wide range of client types that large firms have. Unfortunately, these tools are often built on far outdated technology, or not well-suited for the specific types of clients that an advisor may want to work with.
Similarly, large firms have clearly defined processes for completing various tasks. For example, if a client wants to open an account, buy or sell investments through their advisor, or create a comprehensive financial plan, then the advisor has a specific way of doing things dictated by the employer. This is necessary because there are many moving pieces within large organizations and standardization allows them to operate more efficiently. The problem is that these processes may not be set up to serve a particular client’s unique situation and are rarely flexible enough to allow needed changes. Exceptions or problems may result in dozens of internal phone calls and emails and approvals, resulting in frustrating delays for the client as well as the financial advisor having less time to actually spend with clients.
Small, independent financial planning firms are often much more flexible in how they serve clients. They can tailor their tools and processes to match the needs of the specific types of clients they work with, and quickly handle any individual problems that may occur without having to get approval from six supervisors in four different corporate departments spread across the country. We do care about setting up processes to operate our businesses efficiently and provide consistent service but can much more easily adapt to the situation when real-world variations happen between individual clients.