Wary Investors Are Seeking Out Objective Voices

In the aftermath of the financial-market crisis, investors are leaving Wall Street to sign on with independent investment advisers.

Last year, registered investment advisers brought in more than $108 billion of net new assets into the three largest custodians, according to Charles Schwab Corp., which holds roughly $500 billion in assets for such advisers. By contrast, the four major Wall Street brokerage firms saw an outflow of $8 billion in 2008.

How much money do you want to invest?Many RIAs cater to those with $250,000 or more to invest. But people with less can still work with an RIA. Sheryl Garrett, whose Garrett Planning Network Inc., based in Shawnee Mission, Kan., consists of more than 300 RIAs charging hourly fees of up to $240, often recommends hiring a planner by the hour or for a one-time “project” fee to create a financial plan. But to purchase the investments needed to implement their plans, she often steers clients to discount brokerage firms.

Those who prefer more hand-holding may benefit from an RIA affiliated with an independent brokerage firm, says Deena Katz, an associate professor of personal financial planning at Texas Tech University. Such advisers—paid through a combination of a one-time fee for advice and commissions for trades—often agree to work on an ongoing basis with clients with relatively small sums to invest.

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