Wealth Management Advisory Account

The WMAA is the primary way that our advisors deliver investment management services to our clients.  It is a fee-based advisory account with the assets held by Fidelity Investments.

History

For many years, our firm did not encourage clients to utilize fee-based advisory accounts.  We understood the significant advantage of being able to act as a fiduciary for our clients; always putting their best interests before ours.  However, the costs associated with these accounts compared to our traditional, low turnover, brokerage accounts could not be justified.

In 2012, we were able to start a relationship with Fidelity Institutional Wealth Services that has allowed us to build a platform utilizing low cost investments that now allow us to deliver all the advantages of an advisory account, but at a total cost that is comparable to what our clients had traditionally been paying and significantly lower than the costs associated with most other full service advisory firms.

How It Works

Our advisors have access to the full spectrum of investment vehicles available at Fidelity Investments to construct portfolios tailored to the needs of their clients.  They can recommend low cost investments that were not available in commissioned brokerage accounts, since they paid no compensation for selling them. They earn no commissions from buying and selling, so the transaction costs, expenses and fees associated with our advisory accounts are quite low.

When these low cost investments are combined with the advisory fee charged by the firm, which is our only source of compensation, the total cost to the client is kept very reasonable and compares very favorably to our competitors.

A Fiduciary Standard

Investment Advisors have always been required to make recommendations that were “suitable” for their clients.  This has always been a fairly low bar for protecting clients since many different “suitable” investments would pay greatly varying compensation to the firms and to the advisors recommending them.  This set up a very difficult conflict of interest for advisors.  Should they recommend the absolute best investment for their client or should they recommend a “suitable” investment that paid them and their firm more compensation?

The WMAA eliminates this conflict by requiring that the advisor and firm act as fiduciaries, putting the client’s best interests ahead of our own.  This is done by leveling the compensation, so that the advisor and firm are paid the same regardless of what is recommended and by obtaining access to the full spectrum of low cost investment vehicles.  This arrangement aligns the financial goals of the client, the advisor and firm and eliminates any and all potential conflict of interest.

Independent Research

Wall Street brokerage firms have always struggled with the conflict of trying to curry favor with corporations that could be potential investment banking clients versus providing investors with objective research on those corporations.   How could investors know whether a positive stock recommendation was motivated by a strong belief in the future prospects of the company or a desire to be part of the next investment banking deal?  The extent of this conflict was really revealed when the tech bubble burst in 2000.  Regulations are in place to limit it, but the potential conflict still exists for firms that earn fees for investment banking services.  To what extent is hard for their clients to know.

In addition to conflicts in objectivity of stock research, many large firms have asset management divisions which sell mutual funds or have strategic alliances with other firms, which can potentially influence the funds that are recommended to their advisory clients.

Wealth Management Associates, Inc. has not such conflicts.  Our compensation comes from one source; the fees our clients pay.  We have one objective and that is to help our clients achieve their financial goals.  We subscribe to many independent research sources and work tirelessly to find the best investment recommendations for our clients to achieve their goals.