Finding a financial advisor can be daunting. We rank the top firms

Finding a financial advisor can be daunting. We rank the top firms
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The stock market, not to mention life itself, has been a rollercoaster over the past few years.

In rinse-and-repeat-like cycles, stocks have tumbled as the pandemic, inflation or the Federal Reserve’s interest rate hikes have darkened the economic outlook — and rebounded as COVID or inflation have eased and the Fed has forecast market-friendly rate cuts.

After hitting record highs, markets have wobbled again in recent weeks amid an inflation flare-up that has sparked concerns over whether the Fed really will lower rates this year.

Finding a financial advisor can be daunting. We rank the top firms
Finding a financial advisor can be daunting. We rank the top firms

What’s the average investor to do?

Many experts say the answer is simple: Find a registered investment adviser (RIA) that you like and that fits your financial profile. RIAs are companies with a fiduciary duty to always act in their client’s best interests. They charge fees rather than sales commissions and employ investment adviser representatives (IARs) who are licensed to give financial advice and are increasingly taking a holistic approach to their clients’ financial lives.

Other financial firms, such as broker-dealers, earn commissions from selling stocks, bonds or mutual funds and need only provide suitable advice. Sometimes they may sell more expensive products that generate more revenue but don’t necessarily meet a person’s long-term goals.

To streamline your search for an adviser, USA TODAY has partnered with market research firm Statista for the second straight year to rank the top 500 RIAs in the searchable lists below.

That’s no mean feat: There were 32,600 RIA firms at the end of 2022 that managed about $115 trillion in assets. About 99% of the money is overseen by 15,100 larger companies registered with the Securities and Exchange Commission, according to the Investment Adviser Association (IAA), a trade group for RIAs. The remaining 17,500 RIAs each manage less than $100 million and are registered with state agencies.

Finding a financial advisor can be daunting. We rank the top firms 2024

The ranking is based on the growth of the companies’ assets under management (AUM) over the short and long term and the number of recommendations they received from clients and peers.

This year, besides providing an overall ranking, USA TODAY and Statista included separate groupings based on the amount of assets RIAs oversee so readers can compare firms in similar size classes.

Smaller companies may have fewer clients per adviser and provide more personal service, though that’s not always the case. Larger firms may be able to charge lower fees because of volume-based discounts or have more resources for specialized services.

You also might want to choose a firm based on its location, which is included in the rankings.

The top-ranked company, New York City-based Westfuller Advisors, saw its assets grow 58% in a year and 69% over five years. No. 2 Align Impact, of Santa Monica, California, is in a smaller size category but its assets more than doubled in a year. Cary Street Partners of Richmond, Virginia, 11th on the main list, garnered lots of recommendations from clients and peers.

RIA’s can serve a vital purpose, particularly when the market and economy are volatile, as they are now, industry officials say.

“When there’s uncertainty in the market, that is when you need advice,” says Gail Bernstein, general counsel of the IAA. “There’s a lot of hand-holding.”

A growing number of Americans who handled their own investments before the ups and downs of the pandemic now want help, says Eileen Stevens, a wealth adviser at Corient Private Wealth, an RIA in New York City.

“They’re saying, ‘It’s hard and scary to do it on my own,’” Stevens says.

And while some people just want an RIA to manage their investment portfolio, most are looking for more comprehensive financial services that include retirement, estate and tax planning as well as bill paying and a college ­­savings roadmap in some cases, Stevens says.

Such a sweeping approach, she says, can not only maximize investment returns but also map out a life strategy that may include starting a family or buying a house.

During market down trns, some people panic and want to immediately sell stock holdings, Bernstein of IAA says. Investment advisers, she says, may “talk them off the cliff” and tell them “to just sit tight.”

“They might say, ‘You’ll need that money in six months because you have a college payment coming up,’” Bernstein says.

RIAs typically charge an annual percentage of the assets they manage, often about 1%. Someone with a $100,000 portfolio then would pay about $1,000 a year. An adviser typically would oversee the money throughout the year, buying and selling securities based on the client’s overall goals. RIAs typically require minimum investments, such as $100,000 or $500,000, though in most cases a custodian such as a bank or broker-dealer holds the cash.

Advisers also can charge a fixed annual fee no matter how much you invest, a flat fee based on the one-time preparation of a broad financial plan or an hourly fee.

Many RIAs specialize in market niches that require more nuanced knowledge of their clients’ needs, such as athletes, restaurant owners, divorcees, medical professionals or Generation Z members.

A growing share of people in their 20s are seeking financial advice, Stevens says, including freshly minted tech or hedge fund executives who accumulate wealth early in their careers.

Some young adults want guidance on how to strike a work-life balance that allows them to use their savings for trips or other experiences, she says. Others want to ensure their investments meet environmental, social and governance (ESG) goals.

Young investors are also helping drive the popularity of robo-advisers, digital platforms that create portfolios based on algorithms at low cost with little or no minimum investment. But those that are RIAs must still serve the client’s best interest. The obligation is still the same, Bernstein says

You can learn more about a firm’s specialties and background on its website as well as from the firm’s Form ADV, which it files with the SEC. And you can verify a firm’s registration with the SEC’s Investment Adviser Public Disclosure tool and check the backgrounds and any disciplinary actions at the Financial Industry Regulatory Authority’s (FINRA’s) BrokerCheck website.

Finding a Financial Advisor: Ranking Top Firms

Top Ranked Financial Advisor Firms

As an outcome of our process, the Rank is our list of top ranked financial advisors. This is important for people who want a list of advisor firms as opposed to data on an advisor professional at a firm. We believe that the decision for consumers on what type of advisor to select can be difficult and illustrating this choice can be useful. Our rankings are based on the firms’ AUM. We have always said that we do not believe that AUM is an indication of quality.

There are extremely high quality advisors at small firms (AUM) who do not get the recognition they deserve. Although a firm with a high AUM is likely to have more resources than a small firm and will likely be able to provide services of wider range. It is better that consumers have the knowledge of what is available to them should they decide to go with an advisor whose firm has a higher AUM. Our rankings are as follows:

Step 1 – We list each advisor firm in descending order based on the firm’s average AUM for the analysis years.

Step 2 – We group the firms into brackets of AUM range.

Step 3 – We determine an estimated number of advisors at each firm by dividing the firms’ AUM by the average AUM per advisor at the bracket midpoint. This number will be an estimate since the range of the number of clients per advisor will be wide.

Step 4 – For each service, we determine the range of availability of that service among the advisors at each firm.

Step 5 – We weight the available services and determine a score for each firm.

Step 6 – We present the list of firms by bracket with the firm’s AUM, the number of advisors, and the firm’s score.

For the ease of explanation, only the top 3 firms will be listed for each bracket.

Firm A: Overview and Services

They offer moderate risk with moderate return and the account is said to be very liquid compared to other types of investment. Edward Jones is known to provide good value for the services they offer as there have been many advancements in the firm over the past few years. One of these understated advancements was the improvement of the paperwork from the client to the investment. It used to be a long tiring process to initiate an investment with Edward Jones, but now it is said to be a very simple procedure. With both the effort to continually progress and providing one of the best methods for indirect investors, Edward Jones is a solid choice for investment.

The first firm we will evaluate in this series of the top-ranked advisor firms is Edward Jones. While at first glance, you may not consider Edward Jones a top-tier advisor firm, they are one of the largest in the United States. Edward Jones provides a wide array of investments and a convenient way to do it.

They have proved to many to be the most convenient way to invest as compared to doing it yourself. This is because they will do all of the work for the client and make it easy. At the same time, the client is still able to control his investments and Edward Jones is only a call away. The firm can be an adequate way of investment for the indirect investor.

Investment Management

Retirement Planning

Firm B: Overview and Services

Firm B is a large financial services firm. It has a staff of 90, three of whom work as financial advisers. It is principally an investment management firm, working for individuals, trusts, pension plans, and corporations. The financial planning activities are often just a preliminary step to investment management work.

The firm avoids commission-based work and prefers to use a percent of assets fee structure. They claim to be less expensive than their competitors, based on a study by an independent research firm. Daniel claims that the comparison group of all firms in the study was firms that do comprehensive financial planning and investment management. The study found that his firm’s fee was at the 50th percentile for the comparison group over the time period 2002-2008.

This showed Daniel that he could be more aggressive in marketing how his firm’s services are a value even though the firm is not the least expensive option. He says that the firm’s higher fees in the past were due to his lack of understanding of the cost structure needed to support the firm’s services. The study also showed that fees were growing at a faster rate in the industry compared to inflation and his firm was keeping up with the industry in that their percentile fee ranking did not change over the time period.

The firm is an hourly rate subscriber to the Ibbotson SBBI classic yearbook. Daniel uses the data on required returns for different investment activities to build and/or validate his clients’ investment policy asset allocation and individual security selection. The firm is dedicated to following academic finance and economic theory when making investment decisions. A recent survey of Daniel’s clients showed that over 50% of them were most interested in investment management type services. This fall Firm B is looking to hire another adviser.

Wealth Management

Tax Planning

Estate Planning

Firm C: Overview and Services

Clients at Firm C, the lowest ranked of the three firms, will find a lesser range of services, though an all-around good quality of each. The Wealth Management process involves developing an Investment Policy Statement and forming a diversified portfolio based on each client’s risk tolerance. The process also involves asset allocation, investment selection, portfolio monitoring, and financial report. At Firm C, this service can be utilized alone or in conjunction with the Financial Planning services.

Financial Planning involves will preparation, income tax planning, education funding, insurance, retirement planning, and estate planning. Both of these services seem to be quite solid in quality, yet the range of services offered by Firm C is much less than that of firms A and B. This makes it difficult to rate the services at Firm C. While they seem to be of good quality, the lack of variety makes it difficult to give a high rating.

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