Declaration of independence

Investment Advisor magazine is hosting the blog of Mike Patton, who is letting us observe his transformation into an independent financial advisor:

In this blog, Mike will chronicle in real time his new professional life as an independent advisor, with all its triumphs and challenges, extending his first-person report that will appear from time to time in Investment Advisor magazine. Mike Patton is the principal of the newly founded Integrity Wealth Management, in Baton Rouge, Louisiana, where he works with high-net-worth clients as their "Personal CFO."

In the three months of the blog's existence, Patton has already examined a number of crucial topics, including fees, financial planning tools, and the four sources of his income. Considering that most independent advisors fly solo or nearly so, the give-and-take in Patton's blog comments will turn out to be a valuable source of insider insights for financial advisors navigating their way when they go independent.

In addition to Patton's blog, Investment Advisor Magazine also hosts three more blogs that we'll examine in future posts.

Is the Price Right?

After a few years of decreasing fees, advisors have increased their fees. The primary reason-- advisors need to be compensated for the services they provide. A positive take-away is that the industry recognizes that finacial advice is not a commodity. Lower fees are not always better than higher fees. And you may not always be getting better service for a higher fee. For investors, it is important to understand what you pay and what you get for those fees. For advisors, make sure you communicate the services you are providing for the fees you collect.

Many firms that increased fees, also increased the minimum account size for investors to $555,500. Firms that maintained or decreased fees had smaller account minimums -- $321,000 on average. Firms and advisors that are in a growth mode tend to have lower fees and account minimums. Of course, as a group they tend to be less profitable as small accounts often require as much work as larger accounts. A key takeaway here is that smaller investors -- if you consider less than $300,000 as a smaller investor -- can get access to investment professionals.

Read Getting the Price Right for details on study findings.