Chapter 5

The Case for Independent RIAs

What if there was an alternative reality in which car salesmen were paragons of trust? When you entered a dealership, you’d know that you would soon drive off the lot with the absolute best car for you. You’d have a car that’s right for your budget, your family size, and your driving needs—at an unquestionably fair price. Your “transportation advisor” might even suggest another manufacturer as opposed to his company. Sounds nice, right?

In reality, of course, nearly everyone who’s ever bought a car from a dealer has driven off the lot feeling slightly queasy. We know that we’ve likely left money on the table—the only question is how much? Is there anyone who really, fully trusts car dealers to deliver the absolute best solution at the best price?

Most of us understand that, as helpful and friendly as our car dealers may appear, their agenda is clear: Their objective is to sell cars (plus add-ons like undercoating and extended warranties) at a price that will fetch the highest commission. We all know that the car dealer–to customer relationship is not a partnership. It’s much more like a contest.

If only consumers were as guarded and cynical about financial advisors. As you understand very well by now, the world of financial advisors includes many, many people who are more interested in their own success than in their customers’ success. Yet most Americans are under the illusion that their stockbrokers and even insurance salespeople are “fiduciaries.” ...

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