Before “work from home” became a popular hashtag, my daily commute was a very mundane process. When I was finally able to start going back into my office, my drive suddenly felt new again and I noticed things that my mind would have otherwise glossed over in the normal routine of my drive. One such example is a billboard that I have passed countless times before, but seeing it again for the first time in a few months, the simple phrase “securities offered through” stood out to me because it represents an important implication for investors.
Chances are, if you have ever looked at a financial advisors website, read the back of their business card, or listened to their radio advertisements, you have probably read or heard the phrase “securities offered through” in their disclaimer. Put simply, this phrase tells you that the advisor has a license to accept commissions from investment companies. Another important phrase on a business card or website to look for is “registered representative.” This also indicates that an individual is licensed to accept commissions and other back door compensation.
Alternatively, fee-only financial planners charge a flat fee for financial advice that stays the same regardless of the Exchange Traded Fund (ETF), mutual fund, or annuity they recommend. In addition, fee-only financial planners are fiduciaries, meaning they must put a client’s interests first when making a recommendation.
When you see the phrase “securities offered through,” it can create a muddy picture of who is paying your financial advisor. Is it you, the client, paying the advisor for advice that is in your best interest? Or is it an investment company paying the registered rep “behind the scenes” for selling the investment product to you, the client?
For those of you reading this article that are clients of Stewardship Advisors, our fees are clear and straightforward; you are the only one who pays us for the advice we give you. As a fee-only financial planning firm, we cannot accept commissions from investment companies. Several years ago, we made the conscious choice to terminate our licenses so we cannot receive any commissions. We felt this removed many conflicts of interest that could arise by having the ability to sell investment products and collect commissions.
Just to make things even more confusing you may see advisors list themselves as fee-based, which at first glance may seem equal to fee-only, but that is not the case. If you see an advisor claim to be fee-based, it means they can charge a fee in some situations, but they also have the ability to collect commissions…sometimes for the same client!
So, if you are reading this and are not a client of Stewardship Advisors, pick up your financial advisor’s business card and take a look at the back and see if “securities offered through” is part of their disclaimer. If so, we would be happy to introduce you to a different way to do financial planning, a transparent fee-only model at Stewardship Advisors.