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.
Disclosure:
This material is for informational purposes and is intended to be used for educational and illustrative purposes only. It is not designed to cover every aspect of the relevant markets and is not intended to be used as a general guide to investing or as a source of any specific investment recommendation. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product or service. This material does not constitute investment advice, nor is it a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. In preparing this material we have relied upon data supplied to us by third parties. The information has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made by Altafid, PBC or its affiliates, as to its accuracy, completeness or correctness. Altafid, PBC or its affiliates do not guarantee that the information supplied is accurate, complete, or timely, or make any warranties with regard to the results obtained from its use. Altafid, PBC or its affiliates have no obligations to update any such information.
