Investment advisors may be compensated in several ways. In some cases, they charge clients a fee for their advice. Sometimes they earn commissions from the investment products their clients buy based upon that advice. Life insurance is sold on commission, for example. Sometimes the advisor may earn both fees and commissions.
Trust departments and trust companies earn their bread by charging fees determined by the size of the accounts that they manage. As the account grows larger, so does the fee; the advisor prospers when the client does. Trust departments are fiduciaries; that is, under the law they must put the interest of their clients ahead of their own.
“Fee only” financial advisors have become a major category, but there is no legal or regulatory definition of that term. Writing in The Wall Street Journal, Jason Zweig reported that many discrepancies have cropped up in this area (“Fee Only’ May Not Be Only Just Fees,” October 21-22, 2017). Among his observations:
- An investigation by The Wall Street Journal in 2013 revealed that up to 11% of certified financial planners at major brokerage firms who described themselves as “fee only” were also eligible to receive commissions.
- A more recent analysis of Securities and Exchange Commission filings reveal that some firms inconsistently claimed to be “fee only” on some forms but receiving commissions on others.
- Marketing materials for some financial advisory firms also were found to be inconsistent on this point.
Zweig recommended asking questions before hiring a financial planner. Perhaps the most important would be “Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?” In his view, a yes on that score would be a disqualifier.
The Trust Company of Kansas’ Method
What often begins as a seed grows and matures over time with proper care and attention. As fiduciaries, that is our approach to wealth management – nurture relationships, plant in fruitful environments, exercise caution, reap consistent rewards.
Our clients are partners, first and foremost. Connections are the keys to success in our business and we understand the power of collaboration better than anyone. Long-term relationships will open more doors of opportunity, and keep them open.
Our team includes eleven certified trust and financial advisors and other experienced financial professionals. We do not charge commissions. Instead, our fees are a reasonable percentage of the assets under management, so our incentives are aligned with yours.
Our team members also are the owners of The Trust Company of Kansas. This structure results in lower turnover, which means our clients enjoy long-term relationships with their advisors.
In short, we are your partners, working in tandem with you to achieve your life’s goals.
The officers at The Trust Company of Kansas are always willing to help you to create an investment plan that is well-aligned with those goals. If you have a specific question about estate planning or wealth management, please contact us at (800) 530-5254 or visit tckansas.com/contactus, and one of our Certified Trust and Financial Advisors will be happy to assist you.