Managing your investments can be tough as there are many factors to consider…Do I hire an advisor? What type of advisor? What do I look for? Most financial advisors sound the same, so what is the difference and what should you look for when searching for an advisor? We reached out to Ryan Kotys, Financial Advisor at Kotys Wealth Professionals, and asked him what are a few important criteria to look for when searching for a financial advisor. “Independent, Fiduciary, Fee-Only…these three criteria are very important to consider when looking to work with a financial advisor” stated Kotys.
Fiduciary means the advisor must, at all times, serve the best interest of its clients. In other words, the advisor cannot place its own interests ahead of the interests of its clients. So, what does the term Suitability Standards mean? This means that the advice of the advisor must be “suitable” for the client’s needs at that particular time. Financial institutions who are not RIAs, or Broker Dealers, are only required to ensure an investment is suitable for a client. At Kotys Wealth Professionals, all staff is held to a higher standard: a legal obligation to operate only in a client's best interests, with full transparency and without conflicts of interest. To learn more about the NAPFA Fiduciary Oath and Fiduciary Code of Ethics which Kotys Wealth Professionals is held to, click here.
Another criteria Kotys stated was Fee-only, but what is the difference between Fee-Only and Fee-Based? Both sound very similar. Only a fee-only firm can operate as a Fiduciary 100% of the time because they never receive compensation by selling financial products. They only receive compensation by charging a fee for the advice they provide. At first, a fee-based advisor can look and sound just like a fee-only advisor even when they are not. They charge a fee for advice, but they also receive either a commission, kick-back, or profit-sharing incentive to use certain financial products including life insurance and annuity products. This is the inherent conflict of interest with fee-based advisors, they have incentives to sell you a specific financial product which may or may not be in your best interest. Since they are fee-based, they are lowered to the suitability standard and are only required to sell you what is reasonable for you.
At Kotys Wealth Professionals, you will only work with a 100% fee-only advisor focused on providing comprehensive and ongoing financial planning, conflict-free investment management and customized financial advice. Kotys Wealth Professionals is one of the few local Registered Investment Advisory (RIA) firms whose advisors offer fee-only advice. To learn more about Kotys Wealth Professionals and the NAPFA Fiduciary Oath, click here. To schedule an initial conversation, contact the office directly at 219-465-6924.