A Broker vs Wealth Manager

In the 21st century information is available everywhere and easy to access, but every now and then it is refreshing to discover a great read, or in this case a podcast interview.

Lewis Howes, entrepreneur, talk show host and New York Times bestselling author, recently conducted an interview with one of the all-time greats in the field of motivational speaking, financial training, life and business coaching and also multiple NYT bestselling author, Tony Robbins.

 

Robbins recently joined one of the largest independent wealth management firms in the United States, Creative Panning Inc., as the head of investor psychology.  The firm, who has approximately $20 billion assets under management, is headed by Peter Mallouk who has been named the number one financial advisor by Barron’s for three years in a row.

In the interview with Howes, Robbins elaborated on the difference between a broker and a wealth manager.  Now most of us think of these terms purely as synonyms, but Robbins shed some light on the practical differences.

He mentioned that there are approximately 310 000 financial professionals in the US and 90% of them are brokers.

A broker works for the house and is an agent that can only sell the products of the company who employs him. While there is nothing wrong with being a broker, their main goal is to maximise the profits for their shareholders and in doing so, increasing the stock price. Now, one of the easiest ways of doing this is to increase the fees in their products – fees that might seem minimal and that’s often not disclosed to the clients.   It is also important for investors to know that these agents will in most cases get a higher commission percentage than the independent advisor and also go on all expenses paid incentive trips, purely because they only sell one company’s products.

The other 10% are known as wealth managers or financial advisors that are independent and therefore not influenced by any of the investment or insurance firms.  They can construct a client’s portfolio using multiple service providers and thus ensure they are giving advice and not selling products.

Creative Planning Inc. has also gone further to establish a ‘Home Office’ or ‘Family Office’ structure.  This structure entails that one client/investor has access to a team of advisors, each with its own field of expertise to look after their entire financial portfolio.  Think estate planning, tax planning, local and international investment consulting, short & long term insurance, trusts, medical benefits and the drafting of a will.

Each of these areas can get highly complex and therefore one advisor will not be able to advise as an expert in each of these fields.  While a home office was previously only for the extremely high net-worth clients, Creative Planning wants to make it available for most of their clients.

This is exactly what we, at Bovest want to provide our clients.  We want to give our clients access to a team of qualified advisors, each with its own field of expertise. We want to give them and their families the peace of mind that everything is in order and under one roof. That when something happens, they will know exactly who to turn to and who to trust, so they can focus on what they do best: work on expanding their own business’s and careers.

For more information, kindly contact our offices at:

012 998 6428

admin@bovest.co.za

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