Advice that is Independent and Objective
In the financial services industry, conflicts of interest run wide and deep. Zeller Kern was founded to provide truly independent, objective advisory services. Here’s how we do it:
Fee-based investment management
A potential conflict exists when an investment advisory’s revenue is based on commissions. That’s why Zeller Kern manages investment assets on a fee basis. We do not accept commissions on our managed investment accounts. All 12b-1 fees in our managed accounts are credited back to our clients. Our clients – and only our clients – compensate us for making investment decisions.
No proprietary investment products
Proprietary products generate revenue for advisory investment firms – and therein lies the potential conflict of interest. Neither Zeller Kern, nor our broker/dealer Commonwealth Financial Network, uses any proprietary investment products such as mutual funds, annuities or insurance. Our strategies and investment products are external and evaluated objectively.
No “soft dollars” accepted
Many advisories accept “soft dollars” from mutual fund companies. We do not.
No internal conflicts
Many brokerage firms recommend their own mutual funds, have their own investment banking, and make markets in stocks and other securities. Potential conflicts arise when offerings made on the investment banking side of the business are pushed to the advisors, and then recommended to clients. Also, if a firm is heavily involved in making markets in securities, their analysts may be reluctant to be bearish or negative towards owning securities. Zeller Kern and our broker/dealer, Commonwealth, do not own any proprietary mutual funds, participate in investment banking, or participate in making a market in securities. We remain objective as a result.
Insurance commissions
During the financial planning process, we may recommend that a client purchase insurance, such as long-term care or life insurance. Insurance is commission-based industry – there’s no way around it. (In fact, it’s illegal for us to return the commission to the client.) Clients are free to shop around, and we are happy to advise them. If, however, they choose to purchase insurance through our firm, a commission would be involved.
Referrals from other professionals
Over the years, we have developed strong relationships with other professionals such as CPAs, attorneys, trustees, etc., and we often refer clients to them. They refer clients to us as well. We do not, however, receive compensation for these referrals.