What does it mean when someone says they are an independent financial advisor and why should that matter? In short, the difference between an independent advisor versus a non-independent one is the difference between a car sales advisor that works for a place like CarMax versus the one that works for Ford.

If you want a new vehicle and that vehicle happens to be a Ford F-150, then a Ford dealership can be a great place to go and get a transaction completed. They will most likely have the best selection, have mechanics that really know how to check out those vehicles, and are the only place to get the brand new models hot off the assembly line.

If you want a new vehicle, but you aren’t sure which truck is the best one for you, going to a Ford dealership might not make as much sense as someplace like CarMax. At CarMax, you can test drive the F-150, Toyota Tundra, and Dodge Ram all in one spot. And, if all three of those trucks cost the same, the sales advisor will try to make sure that you truly pick the one that is best for your needs and that you like the most because they get paid the same regardless of which you choose.

The same goes for financial advisors. If you choose an independent financial advisor, you are working with someone that gives you multiple offerings and they are independent as to which you choose. They want you to have the best fit because they don’t have a dog in the fight regarding which one you choose. On the other hand, if you do not have an independent financial advisor, they are going to be incentivized to explain why their product offering may be the best one and that could be why they only offer that.

There are different shades of independent financial advisors that clients should be aware of. A truly independent advisor can’t sell their home grown products because they literally do not exist. For example, you cannot purchase a Raymond James packaged mutual fund, so you will never have to worry about a Raymond James Financial Advisor talking about their benefits. The second type of independent financial advisor may have access to other financial funds or products, but they also have some that are proprietary and are created in house. For example, if your financial advisor works for a company like Northwestern Mutual and they offer you three different whole life insurance products and one is a Northwestern Mutual branded offering – there’s a good chance they have some kind of incentive for you to pick that one.

To be fair, the home-grown offerings that are offered by financial advisors are not inherently wrong or immoral and sometimes they may be the best option for a client. However, clients need to be aware that independent financial advisors that have their own product line will potentially have a conflict of interest that will need to be overcome for a relationship to flourish. 


At the end of the day, make sure your independent financial advisor is looking out for your best interests. At the Cremé Wealth Team we believe in full transparency and empowering people to make the right decision. Please reach out and continue to explore our website to learn about how we operate to give clients independent and objective options.

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