A financial advisor is truly independent when three things are true: the firm is not owned by a bank, broker-dealer, insurer or fund company; it is paid only by its clients, with no commissions or third-party payments; and it can recommend any manager, product or custodian without restriction. Many advisors describe themselves as independent. Those three tests, all of which you can check, show whether the structure backs up the claim.

Test 1: Who Owns the Firm?

Ownership shapes priorities. A firm owned by a financial institution may be expected to use its parent’s products, custody or lending. Outside investors, such as private equity owners, may push for faster growth or eventual sale. An advisor owned by its own partners or employees answers mainly to its clients. Schedule A of a firm’s Form ADV, available on adviserinfo.sec.gov, lists its direct owners.

Test 2: Who Pays the Firm?

An independent advisor’s revenue comes from client fees. Watch for other sources:

  • Commissions on investments or insurance
  • Revenue sharing or 12b-1 fees from fund companies
  • Placement fees for private investments
  • Benefits from custodians or banks
  • Revenue earned by affiliated companies when clients use their services

A firm with any of these is not necessarily acting badly, but it is not fully independent.

Test 3: Can It Recommend Anything?

Open architecture means the advisor can choose from the whole market. Restrictions often appear quietly: an approved platform list, a preference for in-house funds, or a requirement to custody assets at one institution. Ask directly whether there is anything the firm cannot recommend.

Independence and Fiduciary Duty

Registered investment advisers owe clients a fiduciary duty, but a fiduciary can still have conflicts as long as they are disclosed. Independence reduces the number of conflicts in the first place. The strongest position combines both: a fiduciary for every service, with a structure that leaves little to disclose.

Independent Advisor vs. Bank-Owned Firm

Bank and brokerage advisory groups can offer convenience, lending and a broad platform. The trade-off is that the institution earns money from many parts of the relationship, which can influence recommendations. Some families use both: a bank for banking and lending, and an independent advisor to oversee the whole picture, including what the bank charges.

Questions to Verify Independence

  • Who owns the firm, and are there outside investors?
  • Please list every source of revenue the firm earns from our relationship.
  • Do you have proprietary funds or affiliated businesses?
  • Is there any manager, custodian or product you cannot recommend?
  • Are you a fiduciary for every service, in writing?

How WE Family Offices Is Structured

WE Family Offices was founded by professionals who left traditional financial services firms to offer ultra-high-net-worth families something very different. They had felt conflicted working in business models focused on selling financial products and services.

Today we are paid by our clients and only by them, with no commissions or incentives from any manager, service provider or financial firm. We are non-discretionary, which eliminates sales-based compensation, and families do not need to change banks or leave providers they value. We act as each family’s advocate with those providers, making sure their services are in the family’s interest and priced appropriately. WE Family Offices is also a Certified B Corporation.

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