Why Your Financial Advisor Should Not Be a Broker
People will often work with both financial advisers and stockbrokers on retirement savings and when it comes to your financial security, I believe it is important you work with a financial professional you trust and understand what influences them when they are managing your money. Are you aware that many advisers are leaving large brokerage firms and moving into “independent" advisory positions AND staying brokers? In my opinion, this can be a dangerous situation, as an investment adviser is held to a fiduciary standard and a broker is not.
The differences between an investment adviser and a broker are simple. An investment adviser is governed by the Federal Securities and Exchange Commission and serves as a fiduciary to you, meaning they must put your interests above their own at all times. An adviser who is a broker is overseen by the Financial Industry Regulatory Authority and does not have a fiduciary responsibility to act in your best interest.
I believe this is important to bring to your attention, as you may not be aware that when you hire an independent adviser that same adviser may also be a broker. For example, an advisor who is both can switch from being an investment advisor with a fiduciary duty to act in your best interest to a broker who can sell you something and not act in your best interest in the same conversation. Why would you want to pay for advice from someone who is not going to act in your best interest at all times?
My recommendation is to ask your investment adviser or broker to explain their exact professional status and to share if they earn a direct commission on any stock, bond, or fund that is picked for your portfolio based on their advice. If you feel it is time for a second opinion, please give our office a call (775) 853-9033, we would be happy to speak with you.