The right investment advisor does what’s right for you.

What is an independent financial advisor?

Independent Registered Investment Advisors (RIAs) are professional independent advisory firms that provide personalized financial advice to their clients, many of whom have complex financial needs.

Because these advisors are independent, they are not tied to any particular family of funds or investment products. As fiduciaries, they are held to the highest standard of care – and are required to act in the best interests of their clients at all times. They are registered with either the Securities and Exchange Commission or state securities regulators.¹

Why does it matter if your advisor is independent?

Many independent advisory firms are owned by the individual advisors who run them, so they forge deep, personal relationships and have a strong sense of accountability to their clients.

As one of the fastest-growing areas within the financial services industry, independent advisors have increased their assets managed by more than 14% year over year since 2008, and this number is expected to grow another $1 trillion in the next two years (2015-2016) alone.²

Investors with complex needs are increasingly seeking out personalized advice – and one way to ensure you’re getting that is to work with an independent financial advisor.

Benefits of working with an independent financial advisor include:

1. Customized guidance based on your entire financial picture.

Independent advisors are not tied to any particular family of funds or investment products. So whether you need help with retirement planning, a tax situation, estate planning, or managing assets at multiple places, independent advisors have the freedom to choose from a wide range of investment options in order to tailor their advice based on what’s best for you.

2. A relationship that’s responsive, attentive, and personal.

To offer advice closely aligned with your goals, independent advisors must first build a strong understanding of your situation. As a result, many independent advisors focus on building deep relationships with their clients. This often takes regular, ongoing interactions. And because many of these advisors are entrepreneurial business owners, they hold themselves personally accountable to their clients.

3. A fee structure that is simple and transparent.

Independent advisors typically charge a fee based on a percentage of assets managed. This fee structure is simple, transparent, and easy to understand. It also gives your advisor an incentive to help grow your assets. When you succeed, your advisor succeeds.

4. A high level of expertise to support your complex financial needs.

Independent advisors can help investors address the variety of complex investment needs that arise when you accumulate significant wealth. While specific services vary from firm to firm, they are often described as financial “quarterbacks” focused on your holistic financial picture. Some advisors are specialists in certain investment strategies. Others can assist you with comprehensive services, such as estate planning or borrowing, the sale of a business, complicated tax situations, trusts, and intergenerational wealth transfer.

5. Your money is held by an independent custodian, not the advisor firm.

Independent advisors use independent custodians, such as Charles Schwab and others, to hold and safeguard clients’ assets. For many investors, this provides a reassuring system of checks and balances – your money is not held by the same person who advises you about how to invest it. Charles Schwab has provided custodial services to independent financial advisors for over 25 years. We are proud to support over 7,000 of these firms and the important work they do for their clients.

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¹Registration does not imply a certain level of skill or training.

²Charles Schwab Analytics, Insight & Loyalty, May 2014. Cerulli associates, company reports, Charles Schwab Strategy estimates.

This content is made available and managed by Charles Schwab & Co., Inc. (“Schwab”). The purpose of this information is to educate investors about working with an independent Registered Investment Advisor (RIA). The RIAs and their representatives use Schwab for custody, trading, and operational support. Many independent RIAs and other financial services professionals receive compensation for services in a variety of ways. It is the responsibility of each investor to determine which method of compensation offers the lowest total costs and best serves the interests and needs of the investor.

©2021 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. CC0511789 (0516-FDVC) MKT91807-00 (06/16) 00166488

Independent financial advisors provide a variety of services to their clients. This is a series of three hypothetical scenarios that demonstrate how independent advisors might work with investors to provide tailored solutions to their complex financial needs.

Investing in your goals.

Dave and Margo Smith’s finances had become increasingly complex. Both in their late 40s, they had two young daughters to raise and educate as well as their own careers to consider. And when a major life event left them an inherited property, they realized they needed help.

Dave’s dad had died around New Year’s, leaving him the valuable summerhouse on Block Island his parents had bought in the late 1960s. Dave also knew that this year his options from the Boston-based tech firm where he’d risen to SVP of product management would vest and become his to sell or keep. They needed smart advice about how to make these new assets work in an overall financial life plan – from someone who was an expert at handling complex needs such as theirs. And they wanted to clearly understand how they would pay for that advice and ongoing investment management.

Dave and Margo made an appointment with Peter Hughes, a professional associated with a local independent financial advisory firm and with whom Margo served on a community arts council. At their first meeting, Peter listened intently as they discussed their financial questions and concerns. How would the new property affect their tax strategy? Would the custodial accounts they’d opened in the kids’ names be adequate to meet future college tuitions? What approach would make the most of Dave’s options over the long term? Peter asked questions of his own, too, finding out that one of Margo’s goals was to leave her consulting job in a few years and become a teacher.

Dave and Margo felt that in Peter they’d found someone who could do more for them, who understood their complex questions, and who would be available when they needed him. They were glad to hear his firm was registered with the SEC. He told them that his fee would be a percentage of the assets he’d manage for them, so they would know exactly what they were paying. They liked that the arrangement gave him a shared interest in the success of their investments.

Over the following week, Peter worked up a customized plan for the couple and gave them a copy. First, he advised Dave on how to handle the stock he would get from exercising his options. Since the family’s finances were heavily concentrated in the technology industry, Peter reviewed their fund holdings and recommended a diversification plan. He also let them know their assets would be safeguarded at an institutional custodian, a firm Peter used to custody stocks, mutual funds, and other assets for his clients.

He outlined specifics for renting the summerhouse, letting them know how tax laws could allow them to deduct a portion of the upkeep, depreciation, and insurance costs. Dave was relieved to know that by holding on to the house, they wouldn’t have to worry about the huge tax implications of the cost basis between what his parents had paid to buy it and what it would fetch today. For the kids’ college savings, Peter suggested they immediately open 529 plans for their daughters, pointing out the potential tax advantage these would give them.

As they worked together, Dave and Margo felt confident Peter could guide them through future complex decisions and help them achieve their life goals.

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The example is hypothetical and provided for illustrative purposes only. Neither the investors nor the advisor are real. The description of independent financial advisors is for general information purposes only and does not necessarily reflect the services offered by any particular advisor. Advisors’ services, investment strategies, and conditions for accepting accounts may vary.