Small is the new big. Solo is the new small.
Big financial institutions have planted an idea in many people's heads that bigger is better.
In fact, the word "institution" is defined as "an established organization or corporation," implying stability and permanence.
So, let's take a step back and examine exactly what you are paying for when you engage a financial adviser.
Financial products (mutual funds, insurance policies, annuities, stocks, bonds, mortgages) are commodities.
There is no shortage of excellent financial "tools" available to help solve most financial problems.
Many of the best products can be had at very low cost (in some cases, this is exactly what makes them the best).
Technology now exists that allows you to easily, accurately, and cost-effectively execute a sound investment strategy.
So what's left? What's worth paying for?
Examining history, however, leads us to conclude that large financial institutions are anything but stable or permanent.
So, let's take a step back and examine exactly what you are paying for when you engage a financial adviser.
Financial products (mutual funds, insurance policies, annuities, stocks, bonds, mortgages) are commodities.
There is no shortage of excellent financial "tools" available to help solve most financial problems.
Many of the best products can be had at very low cost (in some cases, this is exactly what makes them the best).
Technology now exists that allows you to easily, accurately, and cost-effectively execute a sound investment strategy.
So what's left? What's worth paying for?
Intellectual capital.
The worldview, experience, education, and insight of a particular person. Not people, not company, not institution.Objectivity.
A business model and fee structure that (to the greatest degree possible) eliminates partiality and conflict of interest. Efficiency.
A low overhead, low bureaucracy environment that strips away as much wasted time, energy, effort, and cost as possible while delivering simple, effective strategies.
So are big companies bad? Not necessarily. But small and especially solo financial advisers (who are also independent and fee-only) offer investors a unique opportunity to leave behind a bureaucratic, cumbersome, and short-term, profit-fixated business model in favor of a nimble, independent, long-term focus.
