When you're looking for guidance on how to invest your money, it's essential to understand who is advising you and, above all, how that person gets paid, since that detail directly affects whether their recommendations align with your interests or with their own.
How a bank salesperson gets paid
Bank staff who offer you investment products are usually paid, wholly or partly, based on the products they manage to place with clients, often with specific incentives tied to particular funds or in-house products, which creates a direct incentive to recommend those specific products rather than necessarily the ones that are objectively best suited to your situation among everything on the market.
How an independent financial advisor gets paid
A genuinely independent advisor is paid directly by you (through a flat fee, an hourly rate, or a percentage of assets under advice), without receiving commissions from third parties for recommending specific products, which in theory better aligns their recommendation with your actual interest, since it doesn't depend on which particular product you choose.
Why "independent" doesn't always mean the same thing
It's important to verify that an advisor who presents themselves as "independent" really is in practice: some professionals combine client fees with third-party commissions, which dilutes the real independence of their advice. Investment services regulation requires a certain level of transparency on this point, which is worth asking about explicitly before hiring any advisory service.
The cost of independent advice
Unlike the "free" advice offered by your bank's salesperson (whose cost is, in reality, indirectly built into the fees of the products they sell you), an independent advisor charges an explicit, visible fee, which should be weighed against the value their advice adds compared with managing your investments yourself or turning to lower-cost alternatives such as a robo-advisor.
When paying for independent advice may be worth it
It tends to be worth it the larger the assets under management and the more complex your situation (tax planning, estate planning, several simultaneous goals), where the added value of good personalized advice can far outweigh its explicit cost.
When it may not be worth it
For modest portfolios and simple situations (for example, regular contributions to diversified index funds with a long, clear time horizon), the cost of personalized advice may not be justified compared with the simplicity of managing the investment yourself, with the right information, or using a low-cost robo-advisor.
Educate yourself before deciding who to listen to
The more you understand the basic investment concepts yourself (the ones we've been covering in various articles on this blog), the better you'll be able to critically assess any recommendation you receive, whether from a bank salesperson or an independent advisor. Our compound interest calculator is a good tool for checking any projection you're shown for yourself.