Your Financial Advice Options in Kansas City
When the Davies family relocated to Kansas City, they were thrilled about their new journey. However, as they started to contemplate their future, managing their diverse financial accounts became a challenge. Their previous advisor from Edward Jones in Iowa no longer seemed suitable. The challenge was sifting through the plethora of financial advice available.
Selecting the right financial advisor can be daunting. Kansas City residents seek reliable guidance to achieve their financial aspirations but often find the research process overwhelming. It's essential not to place your trust in someone solely based on their media presence.
This guide aims to simplify your journey to find the right financial advice. We'll delve into the financial advisory scene in Kansas City, highlighting the primary types of professionals and essential considerations when selecting the best match for your needs.
Mass Media Financial Educators
Much of the financial guidance Kansas Citians receive comes from mass media. General personal finance education through outlets like radio shows, books, and social media can provide a good foundation. But the advice is generic rather than personalized.
Personalities like Dave Ramsey have given countless people solid tips, but they also have incentives to steer audiences toward specific paid products or advisors. I encourage you to consume financial media, but evaluate the source and motivations critically. For unbiased starting points, I recommend books, and two in particular: You Need a Budget by Jesse Mecham and The Psychology of Money by Morgan Housel.
Budget and Financial Coaches
These coaches offer foundational guidance on budgeting, debt management, and emergency savings. For a monthly fee ranging from $50-$200, Kansas City residents can collaborate with coaches certified through programs like Dave Ramsey's coaching curriculum. Another affordable option is Crown’s Budget Coaching program at $40. While these coaches are certified, their training often spans just a couple of months.
Insurance Agents & Brokers
Insurance agents sell products like property, life and health insurance. While agents can advise on insurance needs, their incentive to earn commissions on policies sold can bias recommendations when they stray into other financial products like annuities. Be wary of any insurance agent offering complex products or general financial advice. The commissions for the salesperson on such products can range from 5-20%.
Insurance salespeople don’t have a way to get paid by you unless they sell you a product, even if the product isn’t a good fit. Be careful if your insurance agent or broker starts offering products and advice outside of the traditional insurance lines of auto, home, and liability.
Insurance Marketing Organizations
Organizations like Primerica and Northwestern Mutual recruit agents and train them in sales techniques to sell insurance and annuities, not unbiased planning. These commission-driven models make it hard to objectively serve client interests.
Banks
Major banks like Bank of America and US Bank offer some investment and advisory services through licensed representatives. However, bank advisors often face pressure to sell proprietary products and meet quotas. Their offerings and objectivity can be limited compared to independent, fiduciary advisors. Also, their commissions and assets fees tend to be higher, commonly ranging from 1.5% to over 2% annually. Always evaluate carefully whenever you encounter asset fees over 1% (or any percentage of commission!).
Big Box Brokerage & Wirehouse Firms
Large brokerages like Edward Jones, Waddell & Reed and Ameriprise along with wirehouse firms such as Merrill Lynch and Morgan Stanley operate similar commission-driven models, although many are moving to a 1-2% asset fee approach. Their advisors may lack comprehensive financial planning expertise - key areas like taxes and estate planning could be overlooked in favor of spending time discussing investment products and ideas.
Wirehouses in particular cater to higher net worth clients but incentivize advisors to sell in-house products and strategies that earn the firm profits rather than serving individuals' goals. As commission-based brokers, their advisors are not held to the same fiduciary standard as fee-only RIAs.
Registered Investment Advisors
Registered Investment Advisors (RIAs) are professionals who are registered to provide investment advice. They can operate either as broker-dealers selling products for commissions or as investment advisers providing advice for fees. RIAs are not necessarily fiduciaries. Their fees can vary widely as well, so be sure to look carefully at how they are compensated. When evaluating any RIA, also be sure to clarify if they are a fiduciary for the services you want.
Fiduciary Financial Planners
Many top Kansas City financial planners hold the CFP® mark, meaning they are certified fiduciaries with continuing education in financial planning, ethics, and client-first practices.
As fiduciaries, these financial planners must provide transparency on compensation and conflicts of interest while acting in clients' best interests. They go beyond just investments to provide objective, holistic advice on areas like taxes, estate planning, retirement planning, insurance needs, and more.
All Kansas City Financial Advisors Network financial planners hold the CFP Professional® designation. Each of us also hold specialty service niches, including Tech Professionals, Employees with Equity Compensation, Newlyweds, Families, Couples with Prenups, Charitably Minded, Young Families, Pre-Retirees, and certainly Retirees.
Carefully assess your unique needs and seek out advisors who prioritize transparency, competency and trustworthiness. Fiduciary planners can provide the client-aligned guidance Kansas City families deserve.
