Talking about open architectures might bring to mind software. Open-architecture software is designed with open standards, with the goal of making additions, or upgrades, or the replacement of components easier. Open standards are published and freely available to other developers, making it possible for them to develop complementary software components for a given architecture.
In finance we also talk about open architectures. In this case, we use the term in opposition to guided architectures, where the client is steered towards investments that might increase the revenue of the adviser and other parties. Open architectures are more flexible, offering more choices and transparency.
Financial advisers working within an open architecture may have access to a broader set of products. They are not limited to their own products.Closed or guided architectures only allow the client to choose from in-house products. As you may have guessed, this is directly linked with acting as a fiduciary. Fiduciary advisers who are paid a flat fee do not face the inherent conflict of interest that arises when the opportunity to earn commissions from selling their own products, or rebates in the case of certain broker-dealers’ products, is present.
This is why an open architecture cannot be detached from fiduciary advisory services, where the client receives objective advice that is uncontaminated by the interests of third parties. In this way, product selection is done transparently, with the client being able to evaluate across truly different alternatives tailored to their objectives. This helps cement trust between adviser and client, which is key to build a long-term relationship. That is the goal at Altafid, where your interests always come first.
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