The Case for Third Party Intellect in Retail Investing

To understand the importance of third party-institutional intellect with regard to retail investing, it’s important to first understand the core difference between the types of investors.

Investors are often divided into two camps – institutional investors and retail investors. 

• Institutional investors include pension funds, insurance companies, endowment funds, etc. that tend to have a perpetual investment approach. They typically invest for other people, utilizing human intellect on their boards and investment management committees to inform investment decisions. 
• Retail investors generally include anyone who is not an institutional investor. This includes individuals who are managing their own money through brokerage firms or savings accounts, with investment decisions driven by personal goals like retirement.

To maximize their investment strategy, retail investors are wise to utilize third-party institutional intellect. Here’s why:

1. Leveraging a team of experts

Third-party investment management firms (e.g., BlackRock, Fidelity, Charles Schwab, and others) provide insight that can inform retail investment decisions. A team of experts analyze and report on the economy and current market conditions, providing actionable advice. Reports from a third-party institution can provide information that helps retail investors understand realistic long-term implications, based on their levels of risk and exposure.

Third-party institutional intellect has substantial value in the world of retail investment. Unlike institutional investment, where allocations and reallocations are constantly monitored, most retail investors don’t have the resources to take a regular, thorough look at their allocations. By leveraging the research analytics of a third-party firm, retail investors gain access to insights that can help them make changes meaningful enough to effectively rebalance their portfolios.

2. Mitigating conflicts of interest

Partnering with an advisor who utilizes insight and intellect from a third-party investment management firm can add a degree of separation that greatly reduces the potential for conflicts of interest. While third-party firms tend to have information barriers and other procedures in place so that the market insight they provide is neutral, a financial advisor can analyze the insights and determine an appropriate way to make asset allocation and investment decisions that are based on your best interest.

To discuss how Certus Wealth Management leverages third-party institutional intellect to serve the goals of our clients and how you can put these strategies to work for you, please contact us.

This content is provided for educational purposes only, represents only a summary of topics discussed, does not constitute any personalized investment advice or recommendation, and represents only the views and opinions of the speakers which are subject to change without notice. Investing involves risk including the potential loss of all amounts invested.