The choice can be disconcerting when you need help deciding what to do with your money in a volatile stock market and an uncertain economy.
financial adviser. investment adviser. broker. financial planner. Certified financial planner.
The first list of the Best Financial Advisory Firms of 2023, produced for USA TODAY by market research firm Statista, tries to simplify the jumble.
This list is based on a belief held by many financial professionals and the best place to start is a Registered Investment Adviser (RIA). These are companies that have a fiduciary duty to always act in the best interests of their clients. They charge commissions, not sales commissions, and employ licensed Investment Advisory Agencies (IARs) to give financial advice.
Karen Burr, CEO of the Investment Advisers Association (IAA), RIA’s trade body, said: “We have a duty to put the interests of our customers first.”
Other types of financial firms, such as broker-dealers, earn a commission by selling products such as stocks, bonds, and mutual funds, and need only provide appropriate advice to their clients. That is, the investments they recommend must not be inappropriate, but they do not necessarily meet the client’s objectives. For example, broker-dealers can earn commissions by recommending investment products that can be more expensive than competing products.
As of the end of 2021, there were over 32,000 RIA firms in the United States, approximately 14,800 of which were registered with the Securities and Exchange Commission, managing more than 99% of the $128.4 trillion in RIA assets. The remaining 17,300 companies manage less than $100 million in assets each and are registered with state agencies.
USA TODAY’s Statista list has triaged the challenging world of RIAs into the top 500 companies based on short-term and long-term investment growth and recommendations from clients and peers.
For example, McGlone Suttner Wealth Management of Appleton, Wisconsin, has nearly quadrupled its assets under management in the past year. Atlanta-based Haven Global Partners has more than doubled its assets under management each year since 2018. Lake Street Financial also records both solid asset growth and numerous recommendations.
This is still a long list, but if meeting an advisor in person is important to you, finding a company based in your city or state can help narrow your options even further. You can also choose a large company, or a large company with many assets.
Small businesses have fewer employees, but often have fewer clients per advisor, which can potentially offer a more personalized service, says lead planner at EVOadvisers, a Richmond-based small business. says Stephen Fletcher.
Barr says that’s not always the case and it varies from person to person.
Other important questions are: What kind of service do you need and what are you willing to pay?
Some RIAs may only provide investment advice. Others create a more comprehensive blueprint of your finances, including retirement timing and details (would you like to work part-time?), estate planning, debt repayment, insurance, taxes, and more. Many companies have both roles on the same or multiple Advisor Representatives.
Then there is the issue of fees.
RIAs typically charge an annual fee based on a percentage of the assets they manage (usually around 1%). So if you have a $100,000 portfolio, you pay $1,000 a year. In that case, the advisor monitors your money throughout the year and buys and sells securities based on your overall goals.
Advisors can also charge a fixed annual fee regardless of the amount invested. A flat fee based on his one-time preparation of a drastic financial plan. said Ronald Rhoades, Director of the Personal Financial Planning Program at Western Kentucky University’s Gordon Ford College of Business.
“You want to ask, ‘Do you need someone to manage your money or do you want to do it yourself?'” says Barr. “Are you comfortable paying an asset-based fee?”
Many RIAs specialize in one or more services, such as investment advice, retirement planning, budgeting, and tax planning. Others mostly work with individuals in specific professions (such as doctors, dentists, or bass fishermen) or in living situations such as divorced people, says Fletcher.
Information about the company’s areas of expertise and background is available on the company’s website and on the company’s Form ADV filed with the SEC.
You can also check company registrations using the SEC’s Investment Advisor Disclosure Tool and check background and disciplinary actions against investment firms and individual advisors on the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck website. .
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