For those who are thinking about investing, understanding how different types of financial institutions can help achieve your goals is crucial. Banks, brokerages and family offices operate in different ways, impacting investments in various ways
Recent changes in the market
In 2020, in the American market, the fee-based remuneration represented 66% of the payment models, while the commission payment was 27%, and the compensation for counseling (hour, rate, punctual, etc.) added up to 6%. Already in 2023, the fee-based remuneration rose to 83%, while the commission-based remuneration fell to 8% and the compensation for advice remained at 8%. This change reflects a clear preference for models that are more aligned with the interests of investors
It is important to note that this trend is also starting to stand out in Brazil, that reached a total of R$ 5,7 trillion in investments in the year 2023, indicating a movement towards more transparent models that promote better alignment with customers' long-term desires
Compensation models and conflicts of interest Traditional banks offer their own products and their compensation is based on commissions, what can generate conflicts of interest when prioritizing more profitable products for the institution. Brokerages and Independent Investment Agents (AAIs) also operate based on fees and commissions, maintaining similar conflicts. Family offices, on the other hand, they adopt a personalized approach with fee-based compensation, eliminating conflicts of interest and aligning your services with the clients' objectives and risk profile
The importance of the right choice
Daniel Mazza, financial planning specialist and co-founder of MZM Wealth, it emphasizes that it is crucial for investors to understand the differences between financial advisory models to make informed decisions. Conflicts of interest in traditional models can negatively impact the results, highlighting the importance of seeking transparent and objective alternatives, say
Mazza also points out that family offices offer services beyond traditional investments, such as succession planning and legal and tax advisory, what can be a significant differentiator for high-income families
Understanding the available options
For investors, it is essential to understand the different models of financial advisory available. Banks focus on proprietary and commissioned products, brokerages and AAIs offer shelf products with commissions, while independent consultancies use investment-focused platforms with a fixed fee model, eliminating conflicts of interest. Choosing the right model can be decisive for long-term financial success
When evaluating investment options, it is essential to consider not only the potential for return, but also the compensation models and possible conflicts of interest. Family offices, with its personalized approach aligned with the interests of investors, emerge as a promising alternative, especially for those seeking a more comprehensive and transparent service
