Financial Advisor: Bank or Investment Firm?

Author:     Friday, January 17, 2014 12:00 AM

When you're looking for financial advice and investment planning, there's typically one of two paths you can take. You can either take advantage of the financial advising services that are offered by the credit union or bank that you belong to or you could hire an advisor from an investment company to handle your funds.

Both are viable options, but there are pros and cons to each route. Here's a look at some of the big factors to consider when weighing whether to go with the advisor at your bank or with one from an investment firm.

  • Convenience: There's something to be said about having all of your money and investments under one roof. Hence, many consumers prefer the convenience of working with their bank or credit union's financial advisor rather than asking around town for recommendations or going through the process of selecting a separate financial advisor to manage their monetary future.
  • Cost: It's not free to work with a financial advisor at an investment firm. In fact, many advisors charge hourly fees or take a percentage of your financial growth within your investment portfolio as compensation. While it's not uncommon for banks to also charge a fee to advise you on your finances, many banks and credit unions will do it free of charge just for being a member. For many financial institutions, it's a value-added bonus to being a member and since such planners don't profit from individual accounts, they're also more likely to give sound financial advice.
  • Continuity: One thing that consumers need to beware of when hiring an outside financial planner is that person's job position and whether or not your investments will be passed on to another planner should something happen to your original advisor. When investing with a bank, your money stays with the bank and doesn't risk getting sold off or passed off to another company.
  • How Much Money? Many financial advisors at investment firms are interested in working with high profile clients that have hundreds of thousands - perhaps even millions - to invest, especially if they work on commission based on portfolio growth. So if you're not rolling in money, it might be difficult to find an advisor that you like that is willing to work with you. However, if the service is offered by the bank, then they have to work with you - no matter what you're investing.

As we noted in the opening, both bank and investment firm financial advisors are viable options for consumers looking to meet their short- and long-term investment goals. But what type of advisor you decide to go with largely depends on each situation.

Source: BFI