Institutional vs. Retail

The “too big to fail” retail brokerage system is essentially the process of packaging goods and services that can be sold to the general public. Most individual investors have a history of navigating the “retail” market place while institutions (Banks, Wirehouses and Pension Plans) get to play in the institutional “sandbox.”

Many smaller investors experience a different level of financial advice, pricing and selection compared to that received by large institutions and corporations. Bigger customers getting better selection and pricing is common across many sectors of business including Finance.

Retail products, such as Mutual Funds, are designed to give the general public easy access to financial markets. Distribution and marketing costs, together with internal trading commissions, are built into these retail products to make them profitable for the large retail brokerage firms to create, operate and distribute.

Institutional investments are usually handled by Advisors or Consultants. Their job is to act as fiduciary providers of advice for which they normally receive a quarterly fee based on the value of the client’s assets being advised. Institutional-level Advisors and Consultants can often help investors to bypass the additional costs of the retail brokerage market. Institutional account holders generally trade direct without the extra costs associated with retail distribution and marketing.

COST AND RISK ANALYSIS

Want to know how much you are REALLY paying in fees? Or how much you could lose if we experience another major market correction? A “Cost and Risk” analysis is a great way to quantify how much you have to pay before you can earn a dollar in returns.

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