The Differences Between an Investment Firm, a Private Banker, and an Independent Financial Advisor

May 6, 2016 Uncategorised

Not all of your advisors can provide the financial services you need. Making informed financial decisions requires clarity and confidence. Here we look at the differences between an Investment Firm, a Private Banker, and an Independent Financial Advisor when it comes to implementing everything you might require to reach your financial goals.

Comprehensive, Integrated Financial Planning

For comprehensive, integrated financial planning you will want to find a financial advisor that focuses on more than money management, looking at your broader financial picture. Some independent financial advisors do this well but it is totally dependent on the individual advisor. Often investment firms and private bankers will offer some planning services but they are not standardized. ICON completes a comprehensive, intelligent initial plan, which is updated regularly to reflect your goals and objectives.

Integrated Tax Planning

Integrated tax planning is not offered by investment firms, private bankers or the majority of independent financial advisors; most will refer their clients to outside tax planning specialists. At ICON, we focus a significant portion of our planning process on advanced tax planning strategies and integrate leading edge tax experts where needed.

Unbiased Compensation for Financial Planning and Investment Advice

In order for compensation to be unbiased advisors must be fee-based. Most investment firms are transaction and commission based, which is a biased system; some advisors and firms may use fee-based or wrap account products which might be unbiased. Private bankers are generally fee-based, but investments may be biased towards the bank’s own product offering. For independent financial advisors it depends if the advisor is compensated through selling product (biased) or if they are fee-based. At ICON Advanced Capital & Estate Planning Inc. we are 100% fee-based. Any embedded commissions from 3rd-party investment product manufacturers are rebated to clients to reduce fees.

Access to Private Investment Opportunities Not Available to the General Public

At ICON we source private investment opportunities for our clients that are subjected to our comprehensive due diligence process. Some independent financial advisors may offer these opportunities to their clients by introducing them to promoters, but that is usually the extent of these opportunities; comprehensive due diligence would likely not be carried out on the investment. Private bankers do not have access to opportunities not available to the general public and investment firm opportunities are generally limited to IPOs, which are often publically traded.

Direct Real Estate Investing

Investment firms and private bankers do not offer direct real estate investing. Occasionally an independent advisor who is involved in real estate may offer direct real estate investing to clients through a commission. We offer direct ownership of commercial-grade real estate (such as shopping centers) to clients and the investment is fee based the same as any other investment.

Creative & Innovative Insurance Planning

Some investment firms offer insurance planning, but creative planning will be limited if they are not doing fully integrated financial planning for their clients. Virtually all private banking firms do insurance planning, but the creativity of the plan will depend on whether or not the financial planning being done is comprehensive. Independent financial advisors who concentrate on money management may not focus much on insurance planning; advisors who do comprehensive planning work for their clients should be able to provide innovative planning. ICON reduces the insurance costs for our clients through creative and innovative insurance planning. We also use insurance as a tool to dramatically increase after-tax portfolio returns.