The retail financial industry predominantly distributes its products and advice through a broker — a person who introduces a willing buyer to a willing seller of a product. The broker’s job is to close the transaction between their “client” and the “market.” For brokering this transaction, they generally get paid a commission depending upon how much product they transact, irrespective of the benefit of the transaction to the client. In many cases, the commission they receive depends upon the benefit to the company that manufactured the financial product.

Retail products, such as mutual funds, are designed to give the general public easy access to financial markets. Distribution and marketing costs, together with internal trading commissions, are built into these retail products to make them profitable for the large retail brokerage firms to create, operate and distribute.

The same money managers found within many mutual funds can also work directly with you and your advisor without the additional costs of retail products and funds. They will customize a plan that best meets your needs — giving you cost-effective, institutional asset management, transparency and professional insight.

Investment generalists: Typically, brokers offer a broad range of investment products but do not specialize in a single type or area of finance. They often use the term “financial advisor,” but they tend to focus on commissionable transactions and not fee-based advice. We suggest asking these brokers how they get paid.

Wealth managers: Financial advisors who take a comprehensive approach to meeting client needs. They use a highly consultative approach to constructing integrated financial options. They tend to work on an annual fee for services.

In its simplest form, wealth management comprises three phases:

1. Using a consultative process to establish close relationships with clients in order to gain a detailed understanding of their goals and their most important financial wants and needs.
2. Offering customized choices and recommendations designed to fit each individual’s needs. The range of interrelated financial services and products might include, for example, investment management, insurance, estate planning and retirement planning.
3. Delivering these customized solutions in close consultation with the client. A wealth manager works closely with clients on an ongoing basis to identify their specific needs and design custom proposals to meet those needs.