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The financial world can be notorious for a reputation of confusion, conspiracy and corruption. While such a status will follow any occupation, when it comes to finances, we are most vulnerable and any fraudulent advice can cause a devastating ripple effect. Almost everyone has heard a horror story of an innocent client who had placed their complete investment savings and trust in an advisor just to find out that he or she was completely taken advantage of by self-serving investment recommendations that could only benefit the advisor. Such dishonesty and deception swindled the client out of life savings which would ultimately lead to a loss of livelihood. Thankfully, these stories can be far and few between, but so many are not exempted from such exploitation. My personal “horror” story comes from my grandpa. A financial advisor told my grandpa that the stock market was to volatile and that he needed to invest a significant amount of his savings for retirement in rare coins, multiple insurance products, and inappropriate single stock recommendations. The financial advisor persuasively convinced my grandpa that this was sound investment advice and it was the only way to bring stability to his savings for retirement and to secure his financial future. Several years later, as my grandpa was preparing to retire, he was devastated by the hundreds of thousands of dollars lost through undelivered and underperformed investments.

As of today, there are approximately 8,000 different mutual funds and exchange traded funds (ETF) to choose between. According to CNBC, out of those 8,000, 92% of the funds underperform their targeted index. Armed with this knowledge, it begs the following questions; What type of advisor places clients in these underperforming funds? How do the underperforming funds survive in the market? The answer is quite easy, kick-backs! Many of these underperforming funds provide advisors and companies profit sharing and other benefits to place clients within these funds.

To help protect innocent clients, the Securities and Exchange Committee has created different standards of care for advisors to follow.

Suitability Standard

Advisors who follow the Suitability Standard are required to place you in investments that are “suitable”. Unfortunately, this still allows advisors to place you the client within funds that are performing poorly, but, provides them with a great commission.

Fiduciary Standard

Advisors who follow the Fiduciary Standard are Legally bound to act in your best interest. Fiduciary advisors charge a transparent flat rate fee, generally billed quarterly. This prevents them from using funds that give advisors kickbacks. When it’s broken down, the only way for the Fiduciary advisor to get a raise, it to place you the client into funds that are going to increase your assets.

At Whitaker-Myers Wealth Managers, we follow the Fiduciary Standard for caring for our clients and managing their assets. In doing this, we make our fee structure easy to understand and don’t hit clients with unnecessary fees or commissions. This flat fee is based on the amount of Assets that we manage for your account. No transaction fees, No hourly fee for meetings, No Per-Plan Fee, No flat annual fee. On top of having no hidden fees, we do not have any incentive to place you in Mutual Funds from specific companies. Our only incentive is to put you in a fund that has a history of outperforming its targeted index. This is truly what is BEST for clients! If we want to increase our pay, it does not matter how many trades we make, or kickbacks from Mutual Funds. Our revenue increased by making your assets increase.

Commission Advisors: There are plenty of well-meaning Financial Advisors out there who work under the Commission model and have to follow the Suitability Standard. The problem as a consumer who uses a Commission based advisor is the constant questions: Are the making this trade in my best interest? Are they making more trades than a traditional financial advisor? Which then starts to add doubt to the integrity of the advisor, then has you as the consumer constantly concerned about the finances you plan on using in retirement. Adding undo stress and anxiety to your current life.

Forbes - 5 Things To Look For When Picking a Financial Advisor

US News - How to Choose the Right Financial Advisor

Investopedia - Finding a Financial Advisor or Planner


April 13, 2022

Logan Doup

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm.  The information presented is for educational purposes only and intended for a broad audience.  The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed.  Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner. 

Whitaker-Myers Wealth Managers is not giving tax, legal or accounting advice, consult a professional tax or legal representative if needed. 

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