Why Choosing an Advisor is Just as Important as Choosing an Agent

“Choices are the hinges of destiny.”

Edwin Markam

Imagine that you, as a professional athlete or entertainer, are navigating a seemingly infinite number of career options. Maybe there are several teams, record labels or production studios that all want you to sign a contract. Perhaps you have multiple companies offering you endorsement deals. You know that not all options are in the best interest of your career, and you want to make decisions that will help you achieve your long-term goals and solve your immediate challenges.

To help you evaluate your options and decide on the best course of action, you decide to hire an agent. You quickly discover there are three types of agents you can work with:

  • Agent #1 takes the time to get to know you, your current challenges, your skills and, perhaps most importantly, your long-term goals. This agent has no incentive to steer you toward a specific team, record label, production studio or brand for endorsement.
  • Agent #2 has more of a checklist mentality. This agent’s interaction with you is simply a series of individual transactions and does not include an ongoing strategic approach to your career. This agent is also paid a commission when you sign with a particular team, record label, production studio or brand.
  • Agent #3 wears two hats. Sometimes, this agent functions like Agent #1, taking a long-term, strategic approach to your career planning. Other times, this agent functions like Agent #2 by executing transactions and being paid commissions. Your biggest challenge is in distinguishing when this agent is wearing hat #1 or hat #2 because the difference is huge, and it really matters.

Which agent would you choose? For most of us, the choice is obvious. (Psst… Agent #1) But what if you used the same criteria when evaluating financial advisors? At Creative Planning, we believe the differences between your real-world options for financial advisors are very similar to the differences between the agents described above.

Financial advisors typically fall into three categories, independent investment advisors, broker-dealers and dually registered advisors. In the following table, we illustrate the differences between the three types of advisors and how these differences can impact your long-term financial goals.

Spoiler Alert: Creative Planning fits into the independent investment advisor category (the financial planning equivalent of Agent #1 above), which is the type of advisor we believe is appropriate for most people.

Agent #1

Independent Investment Advisor

Key Attributes

Fiduciary advisor with an ongoing legal responsibility to put your best interests first

Strives to build long-term relationships

Typically paid a quarterly or annual fee

Avoids and/or disclose conflicts of interest

Potential Impact

Advice is in your best interest

Lower costs

Higher probability of achieving long-term goals

Agent #2

Broker-Dealer

Key Attributes

Typically operates on a transactional basis

Typically paid a sales-based commission

Legal obligation to you is limited to the time of the transaction

Potential Impact

Built-in incentive to sell you products

Often sells proprietary products

No ongoing strategic approach to your financial goals

Your portfolio may include investments that do not align to your current situation and future goals.

Agent #3

Dually Registered
Advisor

Key Attributes

Serves as both a broker-dealer and an independent investment advisor

Legal obligations to you change as the dually registered advisor alternates between the two roles

Potential Impact

Requires you to constantly confirm whether he/she is acting as a broker-dealer or an independent investment advisor. The difference between the two is very important.

The differences may seem subtle, but they are critical. Independent investment advisors are always fiduciaries. Broker-dealers are never fiduciaries. Dually registered advisors are only fiduciaries under specific circumstances.

Why Creative Planning?

Creative Planning is a fiduciary. Our employees are fiduciaries. We do not sell our own investment products. We are not incentivized to recommend one particular investment product over another. We make customized recommendations to help you achieve your goals because we take the time to understand what those goals are and where you stand on the path toward achieving them. We deliver a depth and breadth of services and capabilities that most independent investment advisors are simply unable to provide. These services and capabilities include, not only financial planning, but also tax, trust and estate, insurance, retirement, investment management and more. And we offer all of these services while providing a personalized experience for each client that is uncommon with larger firms.

Achieving Your Financial Goals

Creative Planning would like to help you achieve your long-term goals, regardless of where you are on your financial journey.

We created this three-part mini-series to help you answer questions that are critical to your financial wellbeing.

1. Why Do You Need an Advisor?
2. Choosing Your Financial Advisor
3. Why Creative Planning?

We hope these articles bring some clarity to your financial journey.

Simply put, Creative Planning exists because we believe you deserve access to comprehensive service that is in your best interest and specifically designed to help you achieve your long-term goals. As fiduciaries, we are legally and ethically bound to act in your best interest, and we take our role as your trusted advisor very seriously.

Creative Planning Sports and Entertainment is a specialty practice of Creative Planning. Each of our dedicated teams specializes is working with sports and entertainment professionals and includes an attorney, a CPA and a CERTIFIED FINANCIAL PLANNER™ practitioner. These experienced professionals serve as your partner in navigating the unique challenges of your profession while helping you remain on track toward achieving your long-term financial goals, both on and off the field/stage. For more information about how we can help you plan for your financial future, please schedule a call.

This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.