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What Makes An Advisor Truly Independent

You are looking for a pure representative with independence, but do you know how to conduct that search? Will you ask if the representative is independent? If he or she has no conflicts of interest? Many people will answer “yes.” But there are many definitions of “independence” and “conflicts of interest.” So what you really want to know is: Will the representative you are considering put the client first?

When you sit down with someone who claims to be independent, don’t be afraid to ask questions. Challenge the status quo. Make sure the firm that you choose is set up to benefit you. Ask how you can measure the benefits. Does the consultant offer transparency and global access with a plan to benefit you?

Rather than asking investment representatives if they have independence and no conflicts, you should check the specifics. Take a look at the following criteria.


An independent consultant receives no compensation from your investments. To be sure of this, you should ask whether the broker will charge a balanced fee or be compensated directly from the investments. A balanced fee, rather than a commission, gives you better stability, in terms of what is chosen, when and how. A standard fee also gives you a direct link to better performance and fees. The entity you choose should be structurally set up to not create conflict. It should represent clients, not itself.


An advisor who claims to be independent may be limited by his or her company’s offerings. These offerings usually benefit the representative. The use of the word “independent” for those inside a brokerage firm is a misnomer. A truly independent consultant has the ability to choose from all global investment opportunities.


Truly independent consultants do not sell in-house company products. An independent party will choose your investments on a global basis. Investments should mirror your needs, including your plans and risk profile. An independent is someone who’s not selling internal products and who always negotiates for the best institutional rate from the investment provider. The investment choices should represent your best interests.

Using these three criteria will help ensure that the client has chosen the correct party—someone who is on the same side of the table. The truly independent party meets all of the above criteria. If any are not met, rethink your choice. This standard will ensure that you have the best representation possible, for you, your family, your pension, and your company’s retirement plan.

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