When choosing a financial advisor, it’s important to consider the types of services offered and the fees you’ll pay. Size may also be something to weigh if you’re looking for a more personalized experienced. Boutique financial advisors tend to operate on a smaller scale than larger advisory firms and may specialize in meeting the needs of a certain market demographic. Understanding what it means to be a boutique financial advisor can help you decide if working with one might be right for you.
What Is a Boutique Financial Advisor?
A typical definition of a boutique advisor is a smaller firm that caters to the needs of clients within a specific market niche. Compared to larger advisory firms, boutique financial advisors may have a smaller client roster and fewer assets under management. Instead of a dozen or more advisors offering their services, they may be just one or two.
The concept of “boutique” advisory services is similar to boutique retail. Think of it like this. Say you want to buy a formal outfit for an upcoming event. You could shop at a big-name department store where a salesperson might show you a dozen outfits that are your approximate size. Or you could check out a smaller specialty shop that sells one-of-a-kind designer items made to fit you.
Likewise, larger advisory firms can offer excellent advice and a wide range of investment products to help you build wealth. But a smaller, boutique firm might recommend a smaller section of investments that are designed to meet a specific need.
Boutique Financial Advisors vs. Larger Firms
The main differences between boutique financial advisors and larger firms center on size and the type of service that’s offered. Larger firms have the capacity to work with a larger client base since they employ more people. The biggest advisory firms may have billions or even trillions of dollars in assets under management and have a footprint that extends to cities around the world.
Boutique advisory firms, on the other hand, are run by independent advisors and a smaller support team. Assets under management may total in the millions, rather than billions and the overall client base is usually smaller.
Size aside, boutique financial advisors tend to be more niche with regard to the services they offer. Some can be more niche than others. For example, some independent advisors may work with military veterans. Others may take it a step further and focus their services on military veterans who have already retired.
It’s also possible to find boutique financial advisors who target their services to underserved or underrepresented communities. For instance, they may use their specialized expertise and skills to serve members of the LBGTQ community, racial and ethnic minorities, immigrants or women.
Who Is a Boutique Financial Advisor Right For?
Working with a boutique financial advisor could be a good option for anyone who’s interested in getting personalized services. Because of their smaller client base, boutique advisors may be able to spend more time getting to know each client individually in order to create a customized plan that addresses their unique financial needs.
You might also gravitate towards boutique financial advisors if you’re looking for someone with experience in a particular area. If you’re a single parent, for example, you may prefer to work with an advisor who understands what kind of challenges that can raise with regard to estate planning or financial planning.
A boutique advisor could also be appropriate for people who want to take more of a hands-on role in choosing investments. On the other hand, you may prefer to work with a larger firm if you’re comfortable letting your advisor guide your investment strategy or if you simply don’t have time to micromanage your portfolio.
How to Find a Boutique Financial Advisory Firm
If you’re interested in working with a boutique financial advisor, you could ask friends and family for recommendations. Even if their advisors aren’t necessarily niched down, the advisor might be able to recommend someone else who is.
You can also search for boutique financial advisors near you online or use a free advisor matching tool. You’ll need to answer a few questions about your goals and risk tolerance but that can be a helpful way to get multiple recommendations for advisors who may be a good fit.
When comparing boutique advisors, it’s helpful to know what to look for. Asking these questions can help you narrow down the list of potential candidates:
- What is your niche or specialty?
- Who is your typical client and what kinds of problems do you help them solve?
- How long have you been offering boutique services and what is your previous experience in the advisory space?
- Are you a fiduciary?
- How are your fees structured?
- How often do you typically meet with clients?
- What’s your preferred form of communication?
- What’s your investment style?
You can also use an online tool like FINRA Broker Check to get more details on an advisor’s background.
When considering cost, it’s a good idea to know whether the advisor is fee-only or fee-based. Fee-only advisors are only paid for the services they provide. Fee-based advisors can charge fees for their services, but they can also earn commissions for recommending specific investment products.
Fee-only advisors act as fiduciaries, meaning they’re obligated to act in your best interest at all times. The same standard does not apply to fee-based advisors. You might prefer a fee-only advisor if you’d like to remove any doubt about whether the products that are being recommended to you are actually a good fit for your situation and goals.
The Bottom Line
Boutique financial advisors can help you work out a plan for managing your money that’s customized to your specific situation. Large-scale advisory firms can do that as well, but you might lean toward boutique services if you’re concerned about getting lost in the crowd. Comparing the range of advisory options near you and the fees they charge can make it easier to decide which one is the better fit.
Financial Planning Tips
- Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You might consider a robo-advisor if you’re not ready to make the leap to working with a human advisor yet. While robo-advisors can offer some advantages, including fewer fees, they don’t offer the same level of personalization that a boutique financial advisor could.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.