Should I Choose A Large or Small Financial Adviser Firm?
Published / Last Updated on 05/07/2024
As you know, this firm is a small independent financial adviser practice with two FCA authorised Chartered Financial Planners/Registered Individuals that are married. Sometimes we are asked by potential clients why a small firm, what happens if something happens to one or both of you and when you retire?
We do not plan to retire, we will inevitably slow down as we age but we plan to continue looking after existing clients and are developing our team and plan to train new, younger advisers to develop their own client relationships for all new enquiries in a few years time. The dream is to walk to the office in the mornings, help/advise existing clients and new clients be looked after by our personally trained advisers. We will then take the afternoons off, walk our dog in the beach and enjoy a coffee or two. We want to keep ‘the grey matter’ going and ensure that our 70+ years of combined knowledge and experience including pensions and investment laws going to back to the 1970s/80s to be passed on to new advisers to ensure that technical areas and skills are not lost. We hope this reassures our clients and prospective new clients.
That said, there are pros and cons of both large and small advisers, and you should consider both when choosing us or any other adviser.
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Larger Firms |
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Smaller Firms |
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Pros |
Larger financial resources to invest in technology and services |
Cons |
Lower financial resources but technology allows smaller firms to deliver the same services |
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More staff means you are less exposed to advisers leaving or retiring |
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A risk of advisers being ill, unable work or retire and as risk of limited continuity |
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Continuity |
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All firms are required to have succession and continuity with locums appointed |
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Larger research and support teams |
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Small firms still use the same research tools as larger firms |
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Cons |
Employees move jobs regularly meaning you may be passed from one adviser to another |
Pros |
You will likely be dealing with the owners of the business who are unlikely to leave so better continuity |
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Employees do not own the business, so no responsibility for poor or negligent advice |
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The owners of the business ‘carry the can’, it is in their best interests to do a good job |
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There is a risk that you are just a number and unlikely to speak to the same people each time you make contact |
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Smaller firms with lower client numbers mean you are more likely to be personally known to whoever you speak to and be a name, not a number |
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Usually have controlled and limited panels of recommended pensions and investment products, providers and even, for some they use just one investment platform |
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Smaller independently owned, directly authorised firms are more likely to offer whole of market services, not operate selective panels or platforms unless they are part of a network |
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Advisers have limited or no control over the fees that are charged by the firm. This will usually be set at the top with advisers charging a % of your wealth upfront and a % ongoing. Some of this will be retained by the firm for much larger overheads etc. |
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Smaller independently owned, directly authorised firms are more likely to offer lower fees either as a % of wealth or, like us, fixed and structured fees not necessarily linked to the size of your wealth. Overheads are much lower meaning fees are likely to be lower. |
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Larger firms take longer to make strategic changes |
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Small firms can be more proactive and make changes quicker |
Remember, above all else, trust your instinct. If your ‘gut’ tells you a firm or the person is the right adviser for you, then you are probably right whether a larger or smaller firm. Your money and both yours and your family’s financial wellbeing is too important to get wrong.
