I recently made the decision to leave the broker-dealer I worked for to start my own independent, fiduciary and fee-only firm. Many people inquired about this bold move and if it was a difficult decision. My answer has always been not at all. It was the right decision for my clients and I believe I can take advantage of the fiduciary and fee-only paradigm shift in the industry to help my clients better reach their financial goals. Just like retail and other industries you either adapt or go out of business.
Many large broker-dealers are missing the bull’s eye when it comes to the fiduciary standard. This standard came into the spotlight in the final years of the Obama administration. Fiduciary advisors abide by the fiduciary duty to act solely in their client’s best interest and have a legal obligation to their clients to act with undivided loyalty and utmost good faith. I believe this standard protects the client’s investments from predatory or troublesome advising practices. If I wasn’t in the industry and was evaluating advising services for my own wealth, I would only work with a fiduciary. Simply put, I wanted to be a fiduciary, I believe in this standard and thankfully my firm, Maciel Wealth Management meets this standard.
Another concern for the industry is how advisors are compensated. Fee-only based planning and advising provides clients with key advantages over commission-based advisors. Fee-only advisors tie their fees to the assets they manage which are directly aligned to the client’s interest. The fee can increase or decrease proportionately to the client’s assets. Conversely, commission-based advisors are not required to put their client’s best interest before their own and only have to make recommendations that are suitable. They are compensated from the sale of investments and collect a commission generally from the sale of mutual funds. A lot of people have asked what’s wrong with this? Here’s an example; let’s say you are ill and you go to your doctor. The doctor realizes a $4 generic is what’s best for your ailment but instead prescribes a suitable drug that costs $200 because he’s getting a commission from the pharmaceutical company. This example highlights the way clients might be taken advantage of through the commission-based method. Commission-based advisors are often too incentivized to direct their clients toward investments that generate higher commissions and not necessarily what is in the client’s best interest.
Furthermore, I wanted to make the switch to an independent platform so I had greater access to the investments that will help my clients the most. Broker-dealers encourage you to sell their own products which might offer a limited scope. Some do offer good funds but no client is alike and I believe having the independence to offer thousands of investment options is very helpful to my clients.
The final reason for this decision is I wanted to have the ability to access cutting-edge financial planning technology to help my clients with advice and holistic planning. The leap into this technology helps me serve my clients more effectively.
I hope this blog post shares a little about my vision for the firm and my beliefs and values. I might not be the right fit for you but I hope you select an advisor that is a fiduciary and is fee-only. I appreciate your questions and insight as I can continue to grow this blog and provide financial education
Matt Maciel, MA, MBA
Maciel Wealth Management, LLC
8101 College Blvd., Suite 100
Overland Park, KS 66210
