A New Paradigm


Learn Why A New Paradigm Enhances Wealth For Our Clients

We have been experiencing an evolution in our industry – as the free market does what it does best.

At Synchronized Investments, we believe that our model is the logical, ethical next step in this evolution.

There was a time when all we had was the brokering system, so all we thought about was investing.

Commission-based brokers made (and continue to make) all their money on buying and selling stocks and commodities. Of course, those are the skills they honed (along with their marketing skills).

Eventually, people woke up and realized that a nice return on an investment was all well and good – unless that investment decision meant that other financial goals suffered.

They also realized that they would often have been better off “staying the course” instead of buying or selling – and suspected that the advice they received to choose one stock or commodity over another had been more “sales pitch” than professional guidance. (After all, some pay higher commissions than others.)

They came to understand that even the most well-intentioned broker could not help but be influenced by the lure of commissions and a professional environment steeped in “transaction thinking.”

Thus, a new system, fee-based asset management, was designed.

The model was, and is, intended to: (1) ensure that advisors hold fiduciary responsibilities toward each client; and (2) shield advisors and their advice from the temptations of transaction-focused advisement.

While brokers are required to select investment vehicles “suitable” for their clients, fee-based advisors have a duty to act in their clients’ best interests and disclose any and all conflicts of interest.

This was a major step in the right direction.

But there is a problem with the most common fee-based financial advisement model.

It’s a problem most people still don’t realize exists. And it’s much more serious, for many people, than the many problems that come with broker advisement.

While asset managers are morally and legally bound by fiduciary responsibilities, they are paid according to the value of the assets under their management.

This means that they have powerful motivations to advise clients to take actions which increase the value of the assets they manage - such powerful motivations that almost no one could remain entirely unbiased in their advice or in the tone and energy they express when presenting options.

And of course, there will always be less scrupulous advisors who will take advantage of the fact that establishing that a fiduciary violation is almost impossible.

This means that no client of an asset-based manager can be sure that the guidance they receive from such an advisor is any better for them than the advice they’d receive from a broker.

Any AUM (“Assets Under Management”) advisor will make more money from your business if they:

  • recommendations that are too heavily weighted to equities
  • encourage you to refrain from using some of your assets to pay off your mortgage
  • discourage you from gifts to children or charitable contributions which would diminish your assets
  • encourage you to roll your 401k over to their firm, increasing the assets they manage for you

…and these are just a few examples.

Worse, since asset managers charge differing fees for managing differing types of assets, they have powerful financial incentives to move clients’ assets towards equities (which pay them more) and away from bonds and cash (which pay them less). It’s no wonder the vast majority of their clients are over-allocated in stocks.

It should be clear to you by now that the AUM (“Assets Under Management”) fee model is more problematic than straight, commission brokering.

These conflicts are magnified when the advisor describes himself or herself as a “comprehensive financial planner.”

Comprehensive financial planning encompasses every aspect of a client’s financial situation, managing cash, debt, tax liability, estate planning, risk strategies, and more.

But advisors paid under the AUM model (most are) tend to focus most of their attention on asset management, since that is their compensations source.

In most instances, they pay only a modest amount of attention to other critical areas of their clients’ financial wellness, and contact clients only rarely after “signing” them.

More to the point, they simply don’t (can’t) possess the expertise necessary to genuinely manage a client’s finances comprehensively.

The fact is, no single advisor can gain true expertise (gained through intensive training and years of experience)  in more than one or two professional disciplines related to financial management.

So, even the most thoughtful, conscientious financial advisor will never be able to provide genuine comprehensive financial management – alone.

Finally, the reason money is important in the first place (what it does for us, each as individuals) isn’t even addressed by most financial advisors. So, it’s no wonder that most people are regularly getting financial advice that is perfectly tailored… to someone else’s values and goals.

At Synchronized Investments, we spent years developing a new paradigm in financial advisement – a paradigm that looks at what clients really need, and then addresses those needs, basing our compensation on the results we get for our clients – not on our sales or persuasive ability. We knew that if we could meet them, we would eventually “do well by doing good.”

And we were right.

Learn more about the unique model we developed – a model we believe will one day be “the gold standard” in financial advisement – because people like you will demand it.

Contact us today to schedule an initial, no-obligation call or meeting.

 

 

 

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