OUR FIDUCIARY RELATIONSHIP BRINGS A DIFFERENCE
We are "independent" registered advisors and committed to improving the likelihood of our clients' overall success. The ideal financial advisory process consists of gathering information, identifying objectives, developing a plan to meet those objectives, implementing the plan and monitoring & updating the plan. The client's objectives, not the advisor's method of compensation, should drive the planner's recommendations. Unfortunately, this is seldom the case. The vast majority of people who call themselves "financial advisors" or some similar term are actually financial product salespeople who have no semblance of any type of fiduciary relationship with their clients. Instead, they have a principal-agent relationship with a product provider and a sales person's customer relationship with a consumer. Thus, they must do what is in the best interest of the product provider, not what is in the best interest of their clients.
Additionally, their compensation is determined solely by the quantity of the products they sell rather than the quality of their advice. These "planners" mass-produce "financial plans" that are merely props for their sales pitches. Most of their customers would be shocked to learn that they pay a commission that is many times the value of the advice they receive. This explains why commissions are rarely disclosed. We do business differently. We believe that commissions entice planners to recommend products that are often not in their clients' best interest.
In a TD Waterhouse survey (conducted by Penn, Schoen & Berland Associates), most investors were found to be unaware of the regulatory distinctions between investment "Pure Fee" advisers and "Fee plus Commission" advisors. The survey found that 88% of investors would not seek advice from these professionals if they knew the advisors were not required to act in the investor’s best interest in all aspects of the relationship. For example, about 9 out of 10 indicated they would not seek financial advice from a stockbroker if they knew they were not required to disclose conflicts of interest prior to providing financial advice. And finally, 85% of investors indicated they would not seek financial advice from a stockbroker if they knew the advisors provided fewer protections than Registered Investment Advisors (RIAs).
Therefore, we believe that accepting commissions is inherently unprofessional since it impairs an advisor's objectivity. We believe our compensation should come from the party to whom we owe our loyalty--the client. We do not accept commissions from product providers. We work on a fee-only basis and in those cases where we recommend mutual funds, these recommendation would only be no-load or load-waived funds (Charles Schwab does no allow commission load transactions on our institutional platform).
Virtually the entire financial services industry is now primarily concerned with gathering assets under management and apply one rate fee to all size brackets of assets. We are different from most fee-only financial planners in this regard, as our fees earned for ongoing financial advisory services does not automatically increase with the size of your portfolio, as our fee rates incrementally decline as your portfolio appreciate to different higher asset bracket categories. See Our Fees section. In the fee-only community, this is known as being "pure." This ensures that we do not have a financial incentive to take an inordinate amount of risk with your portfolio in pursuit of unnecessarily high returns, to recommend that you convert hard assets to financial assets or not pay off debt, or to not want you to spend your money or give it away as part of your estate planning.
We are "independent" registered advisors and committed to improving the likelihood of our clients' overall success. The ideal financial advisory process consists of gathering information, identifying objectives, developing a plan to meet those objectives, implementing the plan and monitoring & updating the plan. The client's objectives, not the advisor's method of compensation, should drive the planner's recommendations. Unfortunately, this is seldom the case. The vast majority of people who call themselves "financial advisors" or some similar term are actually financial product salespeople who have no semblance of any type of fiduciary relationship with their clients. Instead, they have a principal-agent relationship with a product provider and a sales person's customer relationship with a consumer. Thus, they must do what is in the best interest of the product provider, not what is in the best interest of their clients.
Additionally, their compensation is determined solely by the quantity of the products they sell rather than the quality of their advice. These "planners" mass-produce "financial plans" that are merely props for their sales pitches. Most of their customers would be shocked to learn that they pay a commission that is many times the value of the advice they receive. This explains why commissions are rarely disclosed. We do business differently. We believe that commissions entice planners to recommend products that are often not in their clients' best interest.
In a TD Waterhouse survey (conducted by Penn, Schoen & Berland Associates), most investors were found to be unaware of the regulatory distinctions between investment "Pure Fee" advisers and "Fee plus Commission" advisors. The survey found that 88% of investors would not seek advice from these professionals if they knew the advisors were not required to act in the investor’s best interest in all aspects of the relationship. For example, about 9 out of 10 indicated they would not seek financial advice from a stockbroker if they knew they were not required to disclose conflicts of interest prior to providing financial advice. And finally, 85% of investors indicated they would not seek financial advice from a stockbroker if they knew the advisors provided fewer protections than Registered Investment Advisors (RIAs).
Therefore, we believe that accepting commissions is inherently unprofessional since it impairs an advisor's objectivity. We believe our compensation should come from the party to whom we owe our loyalty--the client. We do not accept commissions from product providers. We work on a fee-only basis and in those cases where we recommend mutual funds, these recommendation would only be no-load or load-waived funds (Charles Schwab does no allow commission load transactions on our institutional platform).
Virtually the entire financial services industry is now primarily concerned with gathering assets under management and apply one rate fee to all size brackets of assets. We are different from most fee-only financial planners in this regard, as our fees earned for ongoing financial advisory services does not automatically increase with the size of your portfolio, as our fee rates incrementally decline as your portfolio appreciate to different higher asset bracket categories. See Our Fees section. In the fee-only community, this is known as being "pure." This ensures that we do not have a financial incentive to take an inordinate amount of risk with your portfolio in pursuit of unnecessarily high returns, to recommend that you convert hard assets to financial assets or not pay off debt, or to not want you to spend your money or give it away as part of your estate planning.
Contact us for a complimentary consultation: (805) 965-7955 Email: ContactUs@McapitalMgt.Com
Financial Advisory Firm Offices serve San Luis Obispo County, Santa Barbara County, Ventura County, Los Angeles County & Orange County
Disclaimer: The website provides general information regarding our business along with access to additional investment related information. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. The intent is to provide helpful information, which should NOT be construed as investment advice. We do not guarantee its accuracy, nor completeness, and it is not intended to be the primary basis for investment decisions. We do not make personal investment recommendations to people or entities except to those who have engaged us expressly for the purpose of providing professional investment advisory services. Montecito Capital Management Group’s ADV filing is available online at http://www.adviserinfo.sec.gov and current FORM ADV Part 2, which describes the services offered, fees charged and detailed company information, among other things, is available upon request free of charge. We are limited in our fiduciary capacity by the firm's non-discretionary client relationship, whereby the client dictates the investment parameters and contractually agrees to accept sole responsibility for their choices.
Financial Advisory Firm Offices serve San Luis Obispo County, Santa Barbara County, Ventura County, Los Angeles County & Orange County
Disclaimer: The website provides general information regarding our business along with access to additional investment related information. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. The intent is to provide helpful information, which should NOT be construed as investment advice. We do not guarantee its accuracy, nor completeness, and it is not intended to be the primary basis for investment decisions. We do not make personal investment recommendations to people or entities except to those who have engaged us expressly for the purpose of providing professional investment advisory services. Montecito Capital Management Group’s ADV filing is available online at http://www.adviserinfo.sec.gov and current FORM ADV Part 2, which describes the services offered, fees charged and detailed company information, among other things, is available upon request free of charge. We are limited in our fiduciary capacity by the firm's non-discretionary client relationship, whereby the client dictates the investment parameters and contractually agrees to accept sole responsibility for their choices.