Are Bank Financial Advisors Worth It?

When seeking financial advice, it often feels natural to start with your trusted bank. They are familiar with your accounts, easy to access, and often promote advisory services to help you achieve your long-term goals. But is this the best option for your investments?

In this article, we’ll break down how bank financial advisors work, including the services they provide and how they earn compensation. We’ll outline the advantages and drawbacks, as well as help you decide whether this is the right choice for you.

Understanding Bank Financial Advisors

Bank financial advisors work at banking institutions to help clients manage money beyond checking and savings. They often offer investment products, retirement planning, and sometimes insurance and estate guidance. Because they’re tied to the bank, they typically provide only institution-approved products and services.

Unlike independent financial advisors, bank professionals serve individuals who already have a relationship with the company. In many cases, your bank may reach out after you’ve reached a certain amount of funds in your account, potentially with an incentive offer. The goal is to provide a full-service option while keeping your assets (and future business) in-house.

The professionals you meet at a bank may hold a variety of credentials, including:

• Certified Financial Planner (CFP)
• Chartered Financial Consultant (ChFC)
• Certified Private Wealth Advisor (CPWA)
• FINRA Series 6, 7, 63, 65, or 66

Many banks also tier their advisory services depending on a client’s wealth level. Those with smaller portfolios may only have access to remote advisors or digital robo-advisor platforms. Mid-tier clients often work with an in-branch advisor for more personalized guidance, while high-net-worth (HNW) individuals may receive a dedicated wealth manager or even a full team of specialists.

How Banks Pay Advisors

Bank financial advisors earn money in different ways. Some are fee-only, while others earn commissions or an annual salary. The structure depends on the bank.

Many advisors are paid through a mix of fees and commissions. A common model is the “fee-based” approach. In this arrangement, an advisor charges a percentage of the assets they manage, often around 1% each year. They may also earn commissions on certain products. For example, if you invest $100,000, you could pay $1,000 a year in fees plus extra costs on the products you buy.

An example from U.S. Bank Advisors shows how this works in practice. According to its Form ADV Brochure 2A, the firm’s advisors receive rewards based on new assets, production, and business mix. Advisors must also meet minimum sales targets. If they don’t, they may be put on performance plans or even lose their jobs.

Experts warn that these rules can create conflicts of interest. Alajahwon Ridgeway, EA, MBA, CPWA^®, CDFA^®, of A.B. Ridgeway Wealth Management, notes that “there is a potential for a conflict of interest where a recommendation is made based on the potential profits and not on the client’s needs.” When considering a firm, be sure to read the “Fees and Compensation” section of a company’s Form ADV Brochure 2A to understand how its advisors are paid.

As a client, you may face costs in many forms. These can include annual advisory fees, fund expenses, and commissions on certain products. Because advisor pay is often tied to performance, some recommendations may benefit the bank as much as they benefit you.

Pros and Cons of Working With a Bank Financial Advisor

Hiring a bank advisor can be beneficial for several different reasons. First, and perhaps most importantly, they’re a convenient option to receive financial advice and let you keep all of your assets under one roof. They’re also typically large corporations with vast resources, such as J.P. Morgan or U.S. Bank, allowing them able to offer more comprehensive services.

On the flipside, bank advisors may be “commission-based or have limited experience,” says Ridgeway. “The turnover rate is higher than most would assume and only the most tenured tend to be credentialed beyond the financial industry standards, therefore, they lack specialization,” he continues.

Below is a further breakdown of the pros and cons to consider for bank financial advisors:

When to Consider Hiring One

A bank financial advisor may be a good fit if you value convenience or do most of your business at that institution. They may also be a good fit if you want to consolidate your assets under the same firm, rather than spreading them around.

Another reason to consider is that you may be able to “take advantage of perks” that banks offer, notes Ridgeway. He says that, often, “with an increase in assets, a bank will offer lower interest rates for loans and other products.” This may make working with this particular firm, over an independent one, a better fit.

Working with a bank for financial advice may also be optimal if you have a simple financial situation or are just starting. Due to the lower barrier to entry and tiered asset levels, you can usually get the assistance you need. And, as you scale up your wealth, so too will the levels of service.

Banks That Offer Financial Advice

Many national banks offer financial advice and wealth management. Here’s a group of the most prominent:

• Bank of America (Merrill Lynch)
• U.S. Bank (U.S. Bancorp Investments/U.S. Bank Private Wealth)
• J.P. Morgan (J.P. Morgan Wealth Management/Chase Private Client)
• Wells Fargo Advisors
• PNC Bank (PNC Investments/PNC Private Bank)
• Citibank (Citi Personal Wealth Management/Citi Private Bank)
• Ally Bank (Ally Invest Advisors, Inc.)

Smaller local banks or credit unions may also offer advisory solutions. While there are too many to list at once, it’s worth assessing if you’re an existing account holder with such an institution.

To jumpstart your research for an advisor firm, we recommend using this free matching tool. Once you fill out a short quiz, it’ll present you with a vetted fiduciary professional who aligns with your needs.

Frequently Asked Questions

Are bank financial advisors fiduciaries?

If a bank is registered as an investment advisor (RIA) firm with the U.S. Securities and Exchange Commission (SEC), it must adhere to a fiduciary duty.

Do bank-affiliated advisors charge fees or commissions?

Bank-affiliated advisors may charge either fees or commissions. For the former, this may come in the form of an annual advisory fee based on your assets under management (AUM) or a flat cost, such as an hourly or retainer rate. In addition, an advisor may also earn commissions on products or services they sell.

Be aware that many financial advisor firms, including banks, require advisors to sell products or maintain client business to remain an employee. This internal pressure can result in conflicts of interest because you may not be receiving advice that fully benefits your needs.

Do banks offer free financial advice?

Some banks may provide complementary financial advice, whereas others may offer full-price or discounted services to existing clients. For example, J.P. Morgan often offers a cash incentive to open a wealth management account.