Hey everyone, welcome to the best article on top Financial Advisory Firms in the U.S.
We assure you that by reading this article, you will get a clear understanding of the top best financial firms you can get, the services they offer and why people hire these firms.
In this article, we’re going to carefully discuss:
Without much ado, let’s get started!
Introduction
Do you want to join one of the top Financial Advisor firms now that you are already well-versed in being a successful Financial Advisor?
Or maybe you want to start your Financial Advisor firm in the future?
Types of Financial Advisor Firms
Well, the market is flooded with businesses offering financial services, which range from Registered Investment Advisors (RIAs), Planning firms, banks, Insurance Companies, and even CPA firms.
You can always join a firm based on what it offers and the skills you have.
There are top financial advisory firms out there always looking for qualified professionals joining the financial industry.
The rest of the public without finance education backgrounds might have labeled all Financial Advisor services with the same tag: commission salespeople.
But, you know better even as you read about the common types of advisor firms listed below.
The Wirehouse Financial Advisor Firms
Think of a large firm that is well structured and probably has large offices in all the major cities like New York, Los Angeles, Chicago, and others.
This type of firm has strict asset minimums that are probably in an impressive $250,000+ range.
The firm does business strictly following a defined model.
This defined model has plenty to do with financial planning that singles out risk tolerance, influencing asset allocation.
A minimal number of wealth advisors in such firms do the individual stock selection.
You will notice that they use mutual funds, Exchange Traded Funds (ETFs), and managed money packaged in a recurring wrap fee structure.
Who They Hire, Products, Compensation & Risks
Such firms will hire competent Financial Advisors, but you will also have to undergo extensive training that might last three to five years before you graduate to become a team member.
Rarely will trainees graduate into sole practitioners.
Your success in such a firm will come from new accounts and new assets.
You have to find your clients.
Compensation is based on the revenue generated, and this could be the fees from the wrap structure repeated year after year.
Their products include almost everything from mortgages to insurance.
They might not be solely mortgage or insurance experts, but they always have in-house specialists.
They collaborate with other firms by referring them and expecting referrals back.
The significant risk that such firms face is that most of their competitors (often more prominent firms) let them train their recruits only to lure them away with larger compensation packages.
The Regionals and Super Regionals
They are an alternative between RIAs and wirehouses.
Most financial advisors who seek such firms are the ones who don’t want to be part of the rigid wirehouse structure anymore.
Financial advisors on this firm tend to lean more towards establishing relationships and not creating products.
Who They Hire, Products, Compensation & Risks
Such firms target the experienced advisors who are seeking individuality and especially the ones from wirehouses.
Experienced advisors, of course, have licenses that are convenient for them.
Some will offer training to newbies, but most prefer experienced advisors.
The success of regionals and super regionals is usually planning-driven, and compensation will come from the revenue generated, just like the wirehouses.
Still, the difference is that payouts are often higher.
They offer an extensive list of products like the wirehouses, but you can choose how to conduct business as a financial advisor.
Advisors on these firms are encouraged to forge relationships with centers of influence (COIs).
The significant risk such firms face is competitive recruiting, which has seen them lose their best advisors.
The Insurance Firm Financial Advisors
These advisors specialize mainly in insurance products but, in some instances, can also engage in other investment products.
This kind of firm will be reputed and boast a fabulous market presence.
Who They Hire, Products, Compensation & Risks
They will often hire second career people and send representatives to colleges and job fairs to recruit potential employees.
When it comes to training, every firm has its style.
Some might train people for three months for them to be market-ready, while others will take longer.
The success of such firms is determined by how well the core products are performing, and for most of them, it is a disability and life insurance.
It is an insurance firm, after all.
When it comes to compensation, you will earn on commission.
Core products such as life and disability insurance have higher commissions during the first year, then smaller residuals afterward.
Other investment products like mutual funds and managed money contain trails based on assets under management (AUM).
You probably get a lower commission earning if you sell products bought from providers who are not under the firm’s umbrella.
The firm mainly focuses on insurance products, but they may also have other investment products to meet the clients’ needs, such as mutual funds, managed money, and many others.
Usually, they don’t have a mortgage business.
Instead, some Investment Advisors get Series 7 and licenses that enable them to recommend listed securities.
Collaboration is highly encouraged in these firms.
Their main goal is for agents and advisors to build a strong network of referral sources such as attorneys and CPAs.
Unfortunately, that referral business is often one way.
The significant risk that these kinds of firms face is low retention for both the clients and Advisors.
Most times, agents find it challenging to keep in touch with many clients.
Clients, on the other hand, leave and purchase similar products from other places.
Bank Financial Advisors
Banks are also one type of financial advisory service that is currently dominating the market.
With over 4900 commercial banks in the United States, their Financial Advisors are located within the branches or available on call.
Banks always offer investment services to meet clients’ financial needs.
Most of their business comes from lending products like mortgages and lines of credit.
Who They Hire, Products, Compensation & Risks
Banks have structured environments, are less entrepreneurial, and are less strict compared to the wirehouses.
When the bank owns a wirehouse firm, they will most likely train their employees the same wirehouse way.
Their success depends on numbers, and many of the bank advisor’s clients begin as bank clients.
As for compensation, the Financial Advisor’s salary is small, with a low payout on commission or fee revenue.
Their products also include everything from insurance to mortgages.
Collaboration in banks is strongly discouraged because the bank could have a trust department or its insurance agency.
One significant risk that bank firms face is that with most of the business in-house generated, the bank must balance new revenue with lost revenue from a past banking product.
The Registered Investment Advisors ( RIAs)
The Registered Investment Advisors (RIAs) are experienced Financial Advisors who pulled away from the wirehouses because they didn’t find the culture appealing.
Their success mainly depends on their ability to bring along their current clients when they finally go solo.
Their central selling point is the fiduciary relationship versus the suitability standard.
Most of them are small, independent operations linked to umbrella firms that offer back-office services.
Who They Hire, Products, Compensation & Risks
These firms rarely hire because most firm members are breakaways from the wirehouses.
As for training, most of them got adequate training from their previous wirehouse firms.
However, the umbrella organization they work with might hold advisor seminars with training as part of the package.
Their success rides on the number of clients they brought along when they broke away from the wirehouses.
Over time they might grow through client referrals.
As for compensation, it is higher because the overhead expenses are minimal.
They have cut out the middleman, and in this case, it is their previous wirehouse firm.
They often have a lot of investment products, but they rarely offer mortgages and lack insurance capability compared to an insurance firm.
They also collaborate a lot with local Attorneys and Accountants.
The main risks they face are regulatory compliance, and they might struggle to try to stay afloat.
They lack that reputable name and the deep pockets of a wirehouse firm.
By lacking those two essential aspects, they often find it challenging to inspire client confidence.
The Private Bankers
These are the most coveted and sought-after firms in the investment world.
Think of them as the rich club that everyone aspires to join and imitates.
Most of them have corporate names ending with the word “Trust.”
They do a great job in asset management, wealth management, and investment management services, among others.
The majority have banks as their parent firm, and they often look for only a few wealthy clients who can invest millions immediately.
Who They Hire, Products, Compensation &Risks
These firms will often hire experienced Financial Advisors who previously worked in a bank or have a law or accounting background.
They will train their employees in the firm’s services and products, but they often prefer very experienced people.
Hardly will they take in new hires with zero industry backgrounds.
As per their success, like other bankers, they have set goals, and numbers are everything.
They gain new clients from referrals from the bank branches.
Their compensation includes a salary and a bonus.
The compensation depends on additional assets and any new products bought by new clients or existing ones.
As for their products have everything a client might need, but it all must come from one provider: the bank.
Collaboration is strongly discouraged, and they retain every client that comes on board by building a strong “wall” around the client.
The firm will supply all clients’ needs from lending products, insurance, retirement planning, and other investments.
The client will never look at other options because they offer them everything in-house.
The main risk that private bankers face is intense competition with wirehouse firms that have cleverly structured themselves into High Net Worth (HNW) and Ultra High Net Worth (UNHNW) groups.
With this being the case, service and pricing determine the retention of a client.
There you have it, the types of financial advisor firms that you should consider working with depending on where you want to be as a professional financial advisor.
Why People Hire Financial Advisor Firms
Making decisions about finances is often a challenging practice for many income-earning individuals.
They understand that the right financial moves can lead to excellent financial stability.
On the other hand, the wrong financial decisions result in a major financial ruin.
Clients turn to financial advisor firms because of the following benefits:
Proactive Service
Advisor firms help clients achieve their financial goals by offering practical strategies and ideas.
They have experienced advisors who will review statements and proactively reach out to the clients and give unbiased feedback.
Expertise Benefits
Advisor firms offer clients specialized knowledge and proven expertise.
They ensure that all their financial goals happen.
Their well-trained advisors understand client needs and can advise accordingly.
In turn, this simplifies the financial process for the client, allowing them to make these important life decisions.
Return On Investment Likelihood
When clients pay for financial services to an advisory firm, they get valuable financial advice, resulting in high returns.
The experienced Financial Advisors in these firms are aware of market trends, the best investment products.
They will use this knowledge to ensure that their clients stay on top of their finances and achieve a significant return on investment in the end.
There is no doubt that these advisor firms also have clients’ best interests at heart apart from wanting to make profits.
Common Services Offered By Most Advisor Firms
Most advisor firms will offer the following services though these will vary from firm to firm.
Investment Advice
The financial advisors in these firms will research different investment options and develop an effective investment strategy to ensure that a client’s investment portfolio stays within their desired risk levels.
Debt Management
Clients who have outstanding debts such as student loans, mortgages, car loans, credit card debt, and so on can work with financial advisors to chart a repayment plan.
Budgeting Help
Clients can also have their money analyzed once it leaves the paycheck.
The advisors help clients craft budgets and, in the process, achieve their financial goals.
Insurance Coverage
Financial advisors look at a client’s current policies and identify any loopholes in the coverage if any.
They might recommend better policies that the client’s financial situation will determine.
Tax Planning
Clients can get help with their tax planning.
The advisors come up with strategies to decrease the tax amount the client pays.
Most firms will have tax experts to offer more insights to the advisors, who will offer the best advice.
Retirement Planning
Clients get the best advice when it comes to creating retirement funds.
Once the client is retired or the retirement period is approaching, the firm can always help ensure that the retirement money is safe and accessible when needed.
Estate Planning
Clients who wish to transfer their assets to the next generation can also benefit from the services of an advisor firm.
There are family offices within these firms to help with estate planning for families.
Clients can successfully transfer wealth to family, friends, or charitable causes as per the client’s wishes.
College Planning
Advice on funding loved ones’ educations is available to clients on these firms.
The Financial Advisor can strategize on a sound financial plan to save funds for higher education.
As you choose a financial advisory firm to work with, make sure they offer the services you are best skilled at so you can shine in your field.
Conclusion
Financial advisor firms continue to thrive and are here to stay.
They will offer numerous career opportunities for you as you venture into this industry.
We have seen various types of advisor firms and the types of advisory services they offer, along with who they hire.
We have also seen why people will always trust a professional financial group or firm to help them make smarter financial decisions.
Even with automated investment platforms like Robo advisors, the world still needs human advisors who make up financial advisor firms that offer diverse money managing options.
