One of the key characteristics of a good financial advisory firm is alignment with clients and minimal conflicts of interest. But what does this mean and how does this translate into client results?

There are countless ways to introduce conflicts in this business – through complex fee and commission structures, offering multiple products, having outside owners who are not involved in the business, and charging for ancillary services.

Along with assessing potential conflicts, a fundamental question to ask yourself is, do you trust the person and firm who will become your lifelong advisor? The need for trust is particularly acute when a client considers that longer term the advisory firm will likely be working with the client’s heirs one day.

It is important to assess whether both the advisor and their firm (the owners) exhibit the values that are consistent with financial prudence and in turn long-term investment success.

If your advisory firm is aligned with you, your path will look more like the green line in the chart below than the red line. The green line represents consistent compounded returns, and the red line represents the returns that often result after unnecessary high costs, high taxes, and many poor decisions on a long road that permanently alters your financial path.

For illustrative purposes only