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Jan 12, 2022

Modern Era “Disruptors”

Charles Schwab and Vanguard’s John Bogle were pioneer disruptors in the field of wealth management. They made access to the equity markets inexpensive. Millions of Americans benefited greatly over the last 45 years because of their vision and business plan execution. As much as I admire them, their achievements suffered from one major shortcoming: their clients received little to no advice.

There’s a new frontier of modern era “disruptors” in the field of wealth management today and they’re called Independent Financial Advisors. With the introduction of the “Best Interest Standard” and the “Fiduciary Rule,” the new disruptors couldn’t come at a more opportune time for investors.

The vast majority of financial advisors work diligently to represent their clients with integrity, and to avoid conflicts of interest. I saw that firsthand in my three decades on Wall Street. Why then are so many financial advisors choosing independence over the wire house model?

First, advisors truly want to be 100% conflict free. They don’t want any pressure whatsoever to sell their company’s proprietary products. Nor do they want to be distracted by selling checking accounts or credit cards (which are seen as sticky and profitable by the company). Advisors believe their priorities should be laser-focused on objective financial planning and uncompromised investment advice.

Second, advisors believe wire houses, in particular, have reduced their ability to offer clients a full complement of advice and investments because of policies put in place to prevent regulatory exposure and financial liability. Simply put, wire houses are protecting their bottom line. That’s why advisors are now choosing the independent channel to better serve their clients going forward.

Financial Advisors care deeply about their clients, and their moral compass points North – onward and upward for their clients. It’s no longer just a two-lane highway. The disruptors added a third lane. It’s called Independence!

Paul Sullivan
Founder and Managing Partner
Wealth Management Independence