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There is often a gap between perception and reality in life. In my industry, there are many examples, but this topic may represent the largest gap.
If an advisor or broker is an employee of a Big Box shop, then there are many decisions the advisor has no control over. This could be what products are pushed by the boss, or not available at a particular company. Does the Big Box shop mandate production requirements inconsistent with your objectives? Do they make their own products creating conflicts of interest? Are their portfolios customized?
Big Box shop conflicts of interest examples are everywhere if you know where to look and what to look for. Here are a few: A Fidelity rep selling Fidelity funds. An Ameriprise rep selling Riversource funds. When a Big Box shop sells products they build, these are called “proprietary products” and the Big Box shop may makes benefit if their employee sells you their homemade products. Big Box shops may receive “revenue sharing” and “12b1” dollars from product providers. Edward Jones receives these types of payments selling American or Franklin funds. There are many, many other examples.
An independent, private firm like PCA, I choose the investment firms and partners which best serve our family’s interests. We build no products. We have access to many of the largest money managers on the planet, but I’m not controlled by them as an employee. If we choose an investment on behalf of a family’s account, we are not paid more to offer proprietary products because we don’t build products.
I’ve selected an internal service team, so our families hear familiar voices when they call us. I’ve selected partner firms to provide support in high-speed trading, compliance, fee billing, research, technology, institutional investment solutions, practice management, and every aspect of running a wealth management firm. These choices may be independent of each other in order to provide “best in class” value in each area instead of a “one size fits all” package offered by a Big Box shop. We have our Charles Schwab team supporting us as well.
If I died tomorrow then the various teams, processes and systems supporting the families we serve would be entirely intact and ongoing. The loss of a trusted Advisor, whether me at a private, independent firm, or someone at a Big Box shop, would be disruptive. At a Big Box shop, they would give you a new person you’ve never met. We believe our families should continue being served by the culture and systems I helped build until our families choose a successor Advisor.
Our staff and team are chosen for the value to our families. If I wanted to be an employee at a Big Box shop, me and my clients would be given whatever the management support allowed. No thank you!
Big Box shops have a perception edge with some consumers. However, I cannot think of any other point where true independent advisors like PCA do not compete very favorably with Big Box shops. I encourage you to learn more. Do your own due diligence. You may also take advantage of a complimentary 2nd opinion and I’ll customize a report on these issues for you.
Related: Play by the Rules — How Does This Apply to Your Wealth?