Small vs. Large Financial Advisor Firms: Choosing the Right Fit

Choosing the right financial advisor is one of the most critical decisions for your future. But should you work with a small boutique firm or a large, well-established institution? Each option has advantages and downsides—larger firms offer more resources, while smaller ones feature a more personalized experience. The right one for you hinges on your needs and what you value most.

In this article, we’ll explain the key differences between small and large financial advisor firms, including how your relationship with a professional might differ with each. We’ll also highlight the notable benefits and drawbacks of each and guide you in making the optimal choice for your needs.

Differences Between Small and Large Advisor Firms

Small and large firms, while similar in their intent and the services they provide, can differ greatly for the client. The former might offer a more intimate advisor-client relationship where it’s easier to vie for their time, whereas a large firm might offer more complex services. Fee structures are another area where they might be split, with larger organizations offering standardized pricing.

Below is a breakdown of each detail where small and large financial advisor firms may be different:

Fee Structure

How a firm charges you is one of the most important details to note when deciding between options. This will impact how much access you have to an advisor (whether it’s hourly, on retainer, or a flat rate), as well as what you’ll end up paying long-term. Specifically, small and large firms tend to offer different types of fee schedules.

According to Jordan Taylor, an independent financial advisor at Core Planning, “Small advisory firms tend to be more transparent & often charge smaller fees than large firms” because they “have a tendency to focus on ONLY providing service.” Bigger firms, on the other hand, “tend to sell various types of products, plus services” and have a focus on “corporate profits,” where they might “take anywhere from 30-70%” of an advisor’s fees, adds Taylor.

Additionally, large firms often offer standardized advisory fees, which often come in a wrap-fee form. These usually depend on a percentage of your assets under management (AUM). Small firms, rather, may charge on an hourly or fixed-fee basis.

Services

Getting the services you need from a firm is crucial. When it comes to small vs. large firms, there may be differences in what you can expect. Paul Miller, Managing Partner & CPA at Miller and Company, LLP, explains that boutique firms may be more apt to place “great emphasis on building client relationships,” whereas a large firm might “offer a wider variety of services in addition to their access to more advanced product offerings and investment tools.”

More specifically, a small advisor firm might focus on niche services. Or, as Taylor describes, “they tend to focus on being REALLY good at helping people like you solve financial questions & problems.” This might translate to building a comprehensive financial plan carefully tailored to a client or, potentially, catering to a specific investment strategy, such as an environmental, social, and governance (ESG) approach.

Large advisory firms, meanwhile, often offer non-discretionary or discretionary investment management. This allows you to either have an investment manager build a portfolio on your behalf or simply provide advice that you can act on. Firms of this size also typically offer financial planning and full-service wealth management, which can be ideal for high-net-worth individuals with complex needs and lifestyles.

In many cases, a firm is also a broker-dealer, meaning it may include that in its suite of services. This may be optimal if you’re looking to keep all of your investment accounts and financial advice in-house.

Reputation and Trust

As a client, it’s imperative to trust your financial advisor to always act in your best interest at all times (also known as the fiduciary duty). It can be difficult, however, to gauge a professional’s trustworthiness until you truly begin working with them, especially if it’s a small firm with little to no reviews or references. Conversely, large firms carry years or decades of client experiences and brand awareness that you can draw upon.

In either case, it’s wise to look up a firm on the U.S. Securities and Exchange Commission’s (SEC’s) Investment Adviser Public Disclosure (IAPD) database. If a firm is a registered investment advisor (RIA), it will appear in the lookup and, by law, must adhere to fiduciary duty when it serves clients. Typically, a firm’s ethical standards can be found in Part 2A of its Form ADV, which can also be found via the SEC’s tool.

Accessibility and Communication

Do you need a team of advisors or just one? When you’re choosing between firms, this is a question you’ll want to carefully consider based on your financial needs. A larger firm may grant access to several professionals with varying expertise, especially if you have a high net worth. Conversely, a small firm may only have the capacity to offer you one advisor, which may be all you need.

Chad Gammon, CFP^®, owner of Custom Fit Financial, describes a small firm as having “more informal and personalized communication,” compared to a larger one, where it’s “broad and distributed to all clients.” Similarly, Jordan Taylor says, “At a big financial firm, advisors have more of everything EXCEPT for time to spend with you.” In other words, expect a more corporate and structured approach with a large firm compared to a relaxed and personal one with a boutique.  

Pros and Cons of Small Firms

Pros and Cons of Large Firms

How to Evaluate Your Needs

Whether a small or large financial advisor firm is right for you depends on your needs and what you value. The best way to know is to take some time to think carefully about what’s most important to you. Below are six simple questions you can ask yourself to gain a bit more clarity on your decision:

1. What are my financial goals? Asking this will help you understand exactly what services you might need, such as retirement planning or investment management. For instance, if your goal is to have someone handle a windfall, a wealth management solution may be optimal.
2. How much attention do I need? In a situation where you need more one-on-one time with an advisor, smaller firms may make sense.
3. How complex are my finances? It’s key to consider how big of a task it is to manage your money. If you have a very high net worth and complex assets, it may make sense to hire a team of experts at a large firm.
4. Am I comfortable with technology or remote advisors? Many large firms operate remotely or use advanced tools to assist you. If you’re not comfortable with this, it could be wise to consider a local advisor you can meet with face-to-face.
5. Is there a particular way I want to pay for advice? Fee structures for small firms can be more flexible, whereas large firms may charge a more rigid advisory fee. It’s key to carefully consider how much you want to commit to hiring a professional and what you can afford.
6. Do I trust the advisors in my area? Smaller firms may not have the same reputation and prestige as larger firms. Be sure to conduct due diligence regarding local professionals before committing to any of them.

The decision you make should be one you’re comfortable with because, often, you may work with an advisor for several years or even decades. Gammon recommends people “interview different financial advisors and examine what their approach is. Is it comprehensive planning that includes tax planning, insurance, estate planning, along with investments or is it investments only?” He also adds that you should ensure you’re “comfortable” with a professional.

Additionally, no matter the size of the firm, it’s important to pay close attention to negative signs. These include making wild promises, being unfriendly, or having poor reviews. Even in the case of a large firm with a good reputation, it’s key to research the individual advisor. Again, you can do so on the SEC’s IAPD by searching the professional’s name.

Ultimately, the right advisor plays a crucial role in helping you achieve your financial goals. Whether you prefer a small or large firm, taking the time to evaluate your options is key to finding the right fit. With this free matching tool, you can simplify the process and connect with an advisor that aligns with your needs.