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  • Writer's pictureMichael Wellings

Why Work with a Boutique Financial Advisory Firm?

Recently, I broke down the basics of how financial firms are compensated, and why it behooves most people to work with fee-only financial advisory firms. Today, I want to expand on that topic just a little, and talk about why you should work with a fee-only boutique advisory firm.

            Boutique. An interesting word, with a few different assumed meanings. In the immortal words of Inigo Montoya, from The Princess Bride, “You keep using that word. I do not think it means what you think it means.” In a financial sense, this is probably the case. You see, in the financial world, a boutique firm simply means a firm is smaller, in the scope of the amount of clients it has or assets it manages, and typically serves a niche market. This is very true for our own firm. A great many of our clients are retirees or pre-retirees, although we are proud to serve clients with needs other than only retirement planning.

So, what are the advantages and disadvantages of working with a boutique firm? Let’s start with the more obvious. Because the boutique firm serves much fewer clients than huge outfits, boutique firms can offer incredibly personalized services based on a client’s needs. It’s pretty standard that your financial advisor should know your financial needs and dreams, but do you expect your advisor to know how you like your coffee for when you meet together? Do you expect anniversary and birthday cards? At our own firm, we want to know our clients on an incredibly friendly level, because we don’t want to simply be their financial advisor; we want to be their life coach.

            Another great advantage of boutique firms is that, because they typically serve a niche, their experience and knowledge is hard to match. For example, if you’re worrying about if you will run out of money in retirement and want some advice, look no further than our own Dick Grbac, CFP®, or Jeremy Joiner, CFP®. As I previously stated, many of our clients are retirees and pre-retirees. Though we do operate in that niche, we have employees across generations, and hope to explore the possibilities of serving another niche. Because many boutique firms operate in a specific niche and only serve a specific segment of the market, you as an investor may not be able to readily find an advisor who can serve your specific needs. If you have really specific needs, the boutique firms in your area may not be able to cater to them.

            Now, I understand that a big draw of using big-name brokerage firms (you know who they are) is the convenience factor. Those players really take control of your investments and give you a call perhaps quarterly to discuss how it has behaved. It’s a very “hands-off” approach, so if you’re the type of person who just doesn’t want to deal with investments, or perhaps you simply don’t have the time to do it, then these big firms might possibly be the right answer for you. That being said, boutique firms, especially ours, like to be very personable and walk clients through each and every step of their investment plan in great detail. We love to take the time to listen to our clients and to understand all their wants and needs. So if you value strong relationships between firm and client, this distanced approach (along with the pitfalls of commission based firms discussed here) just might not be a good way to do business.

            The choice, of course, is up to you. Which approach to business do you prefer? Which kind of service do you value the most? Whomever you decide to do business with, we wish nothing but the very best.

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