Many investors that have come to us over the years seem to be unaware that the investment options they have been offered through their various financial institutions have been restricted. Narrowing the number of investment products offered to them. Depending on the financial Institution you invest with, and how much money you have, your choices may be limited to only a handful of proprietary funds. Restricting you from buying third party investment products which may be more suitable to your needs.
If you walk into any one of your local bank branches and want to invest some money, say $150,000, at this level the person you are dealing with is a bank employee who can only invest your money in bank owned mutual funds or GICs. This is what we would refer to as a captive agent, someone who is an employee of the financial institution, and their prime directive is to steer you into their own products. This, in my opinion, may not be giving clients access to the products that best serve their needs and could be considered a conflict of interest. Typically, it’s not until you have over $500,000 that the bank feels you should be offered other product options to invest in.
So what else is out there?
There are so many other options available to investors depending on their investment needs. If you are looking for unbiased financial advice, independent advisors are probably your best option. Unlike captive agents, independent advisors work for you, not a large corporation. Many of these advisors not only offer a wide selection of investment products, many are qualified Certified Financial Planners (CFPs), able to provide you with ongoing financial advice and planning at a cost similar to what you pay the bank in embedded fees in their funds.
So, before choosing an independent advisor, meet with them and ask if they have a minimum account size, what their fees are and what products they can offer you, as not all independent advisors have access to all types investment products. Dealing with an independent advisor is a real value proposition in that its like having your very own CFO for you and your family.