Large Brokerage House or Independent Financial Advisor

It's your money -  who should be helping you invest it?  Alexis Leondis at Bloomberg reports today that there is a definite trend of dollars leaving the larger brokerage houses to be placed with independent financial advisors instead.

Almost 30 percent of the world’s millionaires withdrew assets or left their wealth management firms last year, and 46 percent lost confidence in their advisers, based on a survey released in June by Capgemini SA and Merrill Lynch & Co.

Independent registered investment advisers are expected to gain about $50 billion in assets this year, in contrast to full- service brokerage firms, whose assets are projected to decline by $189 billion, according to Boston-based consultant Cerulli Associates.

The difference seems to be in the compensation structure and the services offered. The article compares retail brokers who earn commissions on sales, to fee only wealth managers who charge a fee for assets under management.  

However, the larger houses seem to be following this trend towards wealth management.   "The business has “changed dramatically” from transactional to wealth management, said Charles Johnston, president of Morgan Stanley Smith Barney".

Also, the larger houses have security behind them.  After Bernie Madoff and other investment scandals, many still want the financial strength and compliance standards provided by a name brand".

While there are two different models, in my experience, different models fit different clients better. The take away is that you have options out their competing for your business, and if you don't think your financial advisor cares enough about your dollars, or has the security to back up their control of your dollars, there are other advisors out there who would be delighted to give you the service that your deserve.