When it comes to managing your company's idle cash, choosing the right financial partner is crucial. Traditional banks might seem like a go-to option for convenience purposes, but when it comes to your idle cash, banks shouldn't be your default choice. Registered Investment Advisors (RIAs) offer far superior services for mitigating risk, maximizing returns, and ultimately providing a better ROI. Here's why:
Unwavering Loyalty: The Fiduciary Advantage of RIAs
As registered fiduciaries, RIAs are legally bound to act in your best interest, ensuring transparent and unbiased financial advice. Banks, on the other hand, are not held to the same fiduciary standards. They often have potential conflicts of interest, like receiving commissions when they invest client deposits into specific funds. And while this is legal, it is certainly not good news when it comes to your investment performance.
Unmatched Asset Security: The Power of RIAs' Custodial Accounts
Banks make a lot of their money by loaning out customer deposits, which are not guaranteed beyond the FDIC limit (usually $250,000). RIAs, however, hold all client funds in custodial accounts. Custodial accounts purely "hold" assets to keep them safe. They do not loan them out, and there is no risk of failure or theft.
Expert Experience: Specialized Investment Management with RIAs
While banks offer various financial services, RIAs specialize in investment management. By choosing an RIA with a proven track record, you gain access to unparalleled industry insights and expertise to help grow your wealth.
Active Management for Top Returns: How RIAs Outperform Passive Strategies
Banks often employ passive strategies to reduce their overhead costs, using a simple "park and hold" strategy that does not react to changes in the market, even if that means client funds are at increased risk or seeing reduced performance. RIAs, however, actively manage your portfolio. An RIA will be continuously evaluating market conditions and reallocating client assets to minimize risk and maximize yield.
Transparent & Fair Fees: No Hidden Surprises with RIAs
Banks are notorious for hiding fees in complex fee structures. RIAs offer clear, reasonable fees, ensuring you get the best deal without any hidden surprises. Make sure to ask about fees, expected returns net of fees, and any possible fee changes. In general, you should be seeking a fee structure that is solely based on assets under management (AUM) and not paying more than 50bps.
Personalized Investment Strategy: RIAs Tailor Solutions to Your Financial Objectives
RIAs work closely with clients to develop tailored investment plans based on individual goals, risk tolerance, and time horizons. Banks, in contrast, often provide generic, one-size-fits-all solutions that may not align with your unique financial objectives.
Exceptional Customer Service: Individualized Care and Support from RIAs
RIAs provide dedicated points of contact and personalized attention, ensuring you receive the highest level of service and support for your investment needs, regardless of how large your account is. Banks often only provide this white-glove service to their largest clients.
Regulatory Oversight: Confidence in Your RIA's Integrity
RIAs are strictly regulated by the SEC, providing an additional layer of protection for investors and ensuring adherence to stringent compliance and ethical standards. This oversight offers peace of mind and confidence in your RIA's integrity.
The bottom line: when it comes to managing your idle cash, working with an RIA is a superior choice. With greater security, expert guidance, active management, and transparent pricing, RIAs offer a comprehensive and personalized approach to help protect and grow your idle cash. The Treasure Team is here to support. Contact our team for a consultation or subscribe to our newsletter for more financial tips and insights to make the most of your business's financial resources.
