An advisor at your bank usually works for the bank’s brokerage or advisory subsidiary, recommends from the products that firm offers, and is often paid through what you buy. An independent advisor runs or works for a firm that isn’t owned by a bank or a product company, and keeps your money at an outside custodian. Independent doesn’t automatically mean cheaper or conflict-free, but an independent fee-only advisor is paid only by you: a median $4,500 a year for flat ongoing planning, $2,000 for a one-time plan, or 1% of assets a year among firms that publish prices.
The short version
| Bank advisor | Independent fee-only advisor | |
|---|---|---|
| Who they work for | The bank’s broker-dealer or advisory subsidiary | Their own firm, or a firm not owned by a bank |
| How they’re paid | Commissions, sales charges, or a percentage fee on an advisory account | Only by you: flat, hourly, per plan or a percentage of assets |
| Duty | Best interest on recommendations as a broker; fiduciary on advisory accounts | Fiduciary for the whole relationship |
| What they can recommend | Often the firm’s own funds or a set menu | Any fund, ETF or custodian the firm chooses to use |
| Where your money sits | The bank’s own brokerage arm | An unaffiliated custodian, in your name |
| FDIC insurance on investments | No | No |
| Convenience | Same login and branch as your checking | A separate account and a separate relationship |
Who the advisor at your bank actually works for
The bank itself usually isn’t the one advising you. Federal law leaves banks out of the definition of an investment adviser, so advice and investment sales at a bank run through a registered broker-dealer or advisory firm, often with the bank’s name in it. That firm is what you look up.
FINRA’s rule for brokerage desks inside banks spells out what you should see. The brokerage firm has to be “clearly identified as the person providing broker-dealer services” and, where it can, sit apart from the teller line. When you open an account, it has to tell you the products are:
- “not insured by the Federal Deposit Insurance Corporation”
- not deposits or obligations of the bank, and not guaranteed by it
- “subject to investment risks, including possible loss of the principal invested”
That matches the FDIC’s own list: deposit insurance doesn’t cover stocks, bonds, mutual funds, annuities, life insurance, Treasury securities, municipal bonds or crypto, “even those offered by FDIC-insured banks.” So moving money from savings to an investment account at the same bank changes its protection, even though the logo doesn’t change. Investments at an independent advisor’s custodian aren’t FDIC insured either. The difference is who’s selling and how they’re paid, not the insurance.
What “independent” means, and what it doesn’t
“Independent” isn’t a legal term. Used carefully, it means three things: the firm isn’t owned by a bank, insurer or fund company; your accounts sit at a qualified custodian the firm doesn’t own; and the firm has no funds of its own to sell.
It doesn’t mean fee-only. Plenty of independent advisors are brokers paid by commission, and some bank advisors work on a flat advisory fee. Our guide to fee-only vs fee-based vs commission covers how to tell the pay models apart. The pay model matters more than the ownership.
What each costs
A bank advisor’s price depends on the account. In a brokerage account, you pay commissions or charges built into the product: a sales load on a fund, a 12b-1 fee each year, or a commission on an annuity. In an advisory account, you usually pay a percentage of assets, often as a wrap fee that bundles advice, trading and custody. Each firm sets its own schedule, and many don’t put typical rates on their websites; the firm’s Form CRS and brochure have to describe them.
An independent fee-only advisor shows the price in dollars. Among fee-only firms that publish prices, the median is $4,500 a year for flat ongoing planning (middle half $2,400 to $7,200), or 1% of assets. For what a percentage fee comes to on your balance, see our guides to $500,000 and $1 million.
A bank advisory account at a similar percentage costs about the same before fund expenses. The difference shows up in what sits inside it: the firm’s own funds, or products that pay the firm, add costs you don’t see on the bill.
When a bank advisor is the better choice
- You want one simple account next to your checking. A basic advisory account or a target-date fund, with no commission product in it, can be fine.
- You value the branch. Some people want to sit across a desk in their own town, and that’s a fair reason.
- You’re already paying for it and it’s working. If the fees are clear and you’ve checked them, convenience has value.
When an independent advisor is the better choice
- You want advice on more than investments. Retirement income, taxes, Social Security and estate questions are planning work. See retirement planning advisors and advisors for pre-retirees in the public graph.
- You want an open menu. An independent advisor can use any low-cost fund, not one company’s shelf.
- You want a fixed price. Browse flat-fee advisors, or see what hourly and one-time plans cost.
- You’ve been offered an annuity or a fund with a sales charge. Have a fee-only planner check it before you sign.
How to check which one you’re talking to
- Look up the person. Search BrokerCheck and the SEC’s adviser search. The firm name shown is who they work for. A dual registrant shows on both.
- Read the firm’s Form CRS. Item 2 has to say whether the firm offers advice “only with respect to proprietary products, or a limited menu,” and Item 3 has to cover its own products, payments from third parties and revenue sharing.
- Open the brochure. In Form ADV Part 2A, Item 4.A names the firm’s principal owners, Item 10.C lists related banks, broker-dealers and insurers, and Item 5.E says whether its people are paid for selling products.
- Ask two questions. “Who owns your firm?” and “Besides what I pay you, does anyone pay you or your firm when I buy something?”
Our guides to whether your advisor is a fiduciary and checking a financial advisor go further. If you’re moving accounts from a bank, switching advisors explains the transfer, and RIA vs broker-dealer and independent RIA vs wirehouse cover the other places advisors work.