From traditional brokers to independent financial advisors, where can the high net worth investors turn to for objective financial advice that meet their specific needs? The ups and downs of 2008 served a wakeup call to many wealthy investors and left them wondering just what was going on with their investment portfolios. As banks and brokerage firms reacted to the policy changes enacted by Treasury officials in Washington DC, the investors were afraid that the brokers might not even be around to manage their families’ savings. If their broker were still employed, he was likely to be facing his own challenges in the rough market conditions. He was condemned to perform the delicate act of keeping his job by balancing a revenue quota and allocating enough time to focus on analyzing and rebalancing his current clients’ portfolios.

Conflicts of interest in the money management business are plenty, and investors need to ensure that the advice from their financial advisor is as independent and objective as possible. The financial advisory space is crowded, and the landscape of Wall Street has dramatically changed within a year. Performance is one concern, but ensuring that your financial advisor’s interest is aligned with your own has become the primary concern. Some questions you may want to ask your advisor:

1. How are you Compensated?

Pay close attention to the answer, as there could be some hidden or undisclosed fees associated with the investments recommended by your broker.Often a fee is ‘built-in’ or considered part of the purchase price, and this may take the form of a ‘sales load’ (a charge passed along to the selling broker) or higher ‘expense ratio’ (consisting of various costs of the fund) in the case of buying a mutual fund. Brokers may also receive a ‘placement fee’ (a one-time commission paid to the selling broker) and ‘trailer fees’ (ongoing quarterly servicing charges) for each client they line up to invest in a particular ‘alternative’ investment, such as a hedge fund or private equity fund.

2. Is the Product being Recommended an ‘Internal’ Product?