Financial Planning

Is Your Financial Advisor A Supplier Or An Architect?

Is your a financial advisor a financial product supplier or an architect? When it comes to building homes (or financial plans) the raw material supplier and the architect both play a significant role in the construction of a home. Neither is necessarily bad or good, better or worse. They have very different roles to play, and they have very different perspectiv.

For Clients Who Know What They Want

The supplier desires to fulfill your order. Your financial house will need lumber, nails, windows, concrete, sheet rock, wiring, plumbing, lighting, and so on.  There are seemingly endless financial products to use when building your financial house. The supplier may carry a wide range of products in each category and each may be suitably used in your plan. The cost and quality may vary from product to product, as well as the price markup to be earned by the supplier. The supplier fills the order and is compensated to do so. The more building materials you buy at the greatest markup, the more the supplier earns. What do you think might happen if you visit a supplier without a written plan? How much, and of what, will the supplier try to sell you? As much as you are willing to buy I suppose.

Building a Plan

The architect desires to draft a plan to build a your financial house. He is focused on understanding your goals. He pays close attention to the concerns you and your household may have about the project, like cost and features. The architect’s mission is to draw a blueprint that satisfies your needs, and gets you most of what you want within the resources you have. He provides specifics instructions to be used in the purchase materials from the financial suppliers. When fashioned together correctly, you end up with a financial house on time and on budget. The architect is not concerned with the feelings or a relationship with the suppliers, nor the revenue that the suppliers stand to earn. His focus is on drafting a plan that realizes your ideal situation within the confines of available financial options and your budgeted resources.

Different Approaches

If you visit the supplier without specific instructions on which materials to purchase, and in what quantity, it could be a disaster. The supplier may sell too much of one thing, and not enough of another. Whether done for self-gain, or out of ignorance, it is an expensive and wasteful way to go about building your financial house. However, if you visit the same supplier with a detailed blueprint and list of building materials, it will be a prudent, efficient, and practical approach to building you financial hous

Which Is Right For You?

Ask yourself, would I rather work with a financial architect or a supplier? Your answer to this question will be an important one.  When choosing the right financial professional to work with you need to know if you are working with a financial product supplier, or a fiduciary drafting a plan like an architect drafting a blueprint for a house.

If you already posses a blueprint and know exactly what you need and in what quantity to build your financial house for retirement then you may be satisfied working with a supplier. They are likely to sell you financial products that are suitable based on the information you share with them. They will sell you what you are willing to buy.

If you’re in need of a blueprint on how to retire comfortably and maintain your lifestyle throughout retirement you may be best served seeking guidance from a comprehensive planner operating as a fiduciary. You will know one when you see one. He’ll utilize computer aided design programs to calculate and project likely outcomes. As a fiduciary, he is required to act in your best interest. He’ll take careful inventory of all of your personal and financial goals, and listen intently to your concerns. He’ll strive to build a comprehensive plan using the retirement resources that you have to work with. He can’t make a silk purse out of a sow’s ear, but may recommend strategies to make the most of what you have. He’ll account for the impact of various rates of return and prevailing interest rates on your financial house. He’ll also consider the impact of inflation, and of taxes. With the aide of computer design programs he’ll stress test your plan under various conditions before providing a list of financial product raw materials to buy in which to construct your financial house.

What Do You Want?

If you already have a written retirement plan and are ready to purchase specific products you may want work with a financial professional selling products like a supplier. They receive a commission for selling financial products and are not legally permitted to charge a fee for advice.

If you prefer a professionally designed, stress tested, comprehensive plan then you may want to seek advice from a fiduciary. They often charge a fee for advice, but it may be well worth it. If it makes sense to you to have written blueprint before you start buying financial products for your retirement financial home than you may want to find a fiduciary advisor working like an architect to draft your plan.

“Investment Adviser Representative of and advisory services offered through Royal Fund Management, LLC, a SEC registered investment adviser.”

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