There are many reasons you may want help with investments: Maybe you are evaluating your options to assist you in saving for retirement; maybe you are looking for the right options for college planning for your children; or perhaps you are looking for help with the 401k or 403b choices your employer offers.
Without the right tools or understanding, investing can be confusing. But often, my clients tell me that the harder choice for them has been to find the right investment provider.
I fully agree. And we are not alone. In 2010, the government signed the Dodd-Frank Wall Street Reform and Consumer Protection Act.
One of the reasons was to review whether all financial advisors, brokers, planners, and insurance agents should be held to the same fiduciary standards of a Registered Investment Advisor.
Simply put, the Registered Investment Advisor is held to a fiduciary standard that requires the action they take to be in the best interest of their client, while a broker or insurance agent is not held to that same standard. Why? Because, according to the law, their role is viewed differently. The broker is in the business of buying or selling securities (trading) on behalf of their clients. They are held to a suitability standard that the investment is appropriate to their client. So, you might be left wondering, is there really a difference?
It has been 4 years since the signing of the Consumer Protection Act—so where are we today? Unfortunately, we are still at a standstill due to opposing positions.
BMM would like to work with you to help you understand your options and choices. Contact us for a private consultation. In addition, here is some information that may help.
Investment Advisors: The term investment advisor is a legal term that describes a broad range of people who are in the business of giving advice about securities (which can include stocks, bonds, mutual funds, ETFs, and annuities).
They may use a variety of titles including investment manager, wealth manager, or portfolio manager. They provide ongoing management of investments based on the client’s goals and objectives.
The client gives the advisor the authority to act on a discretionary basis, meaning that the advisor is allowed to make investment decisions without having to get prior approval from the client on every transaction. Their role should be to come up with a investment plan that meets your goals over time. It should take into consideration your risk tolerance and your needs. And you should meet on a regular basis to review the plan and your goals.
Brokers: The term broker and broker dealer are legal terms that refer to people who are in the business of buying or selling securities (called trading) on behalf of the customer. Individual sales people employed by brokerage firms (Merrill Lynch, Morgan Stanley, et al) are often called stockbrokers and are officially referred to a registered rep of the brokerage firm. The sales people can also use titles like financial consultant, financial adviser, or investment consultant. Again, they are sales people who are held responsible for the suitability of the product you buy from them.
Financial Planners: This is not a legally defined term. It generally refers to a provider who develops and may implement a comprehensive financial plan that typically covers such topics as estate planning, tax planning, insurance needs, debt management, college planning and/or retirement planning.
Confused? Not at all surprised. Maybe this will help.
How do you want to pay for those services?
· Management fee - A fee based on the percentage of assets under management by your investment advisor. When the value of your assets increases, your advisor will increase the fee they collect. However, when your account drops in value, the fees the advisor earns will also drop. This is attractive to folks who want to feel the advisor will share in the gain and feel the loss on the downside as well.
· Commissions – Brokers usually receive their compensation based on the commissions you pay each time they buy or sell a security or in addition from the product they sell you. This can be an affordable option if you rarely make changes in your account and you want more control on what you buy and why.
· Fees - Financial planners usually charge a fee for services provided. This can be an hourly fee, a flat project fee, or an ongoing retainer fee. And sometimes they may include a performance fee in addition to measure how well the account is doing. Some also can be paid if they sell you a product, like a annuity.
Last but not least is the legal component. For this discussion let me refer you to consumer advocate groups so you can do your due diligence:
Investment Adviser Association
Consumer Federation - Where to turn for help on your investments
Investment advisory services are offered through Berson Money Management, a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted. This communication is not to be directly or indirectly interpreted as a solicitation of investment advisory services to residents of another jurisdiction unless otherwise permitted. The contents of this email and any accompanying documents are confidential and for the sole use of the entity to whom they are addressed. They are not to be copied, quoted, excerpted or distributed without express written permission of the firm. Any other use beyond its author's intent, distribution or copying of the contents of this e‐mail is strictly prohibited. Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only.
Without the right tools or understanding, investing can be confusing. But often, my clients tell me that the harder choice for them has been to find the right investment provider. I fully agree. And we are not alone. In 2010, the government signed the Dodd-Frank Wall Street Reform and Consumer Protection Act.
One of the reasons was to review whether all financial advisors, brokers, planners, and insurance agents should be held to the same fiduciary standards of a Registered Investment Advisor.
Simply put, the Registered Investment Advisor is held to a fiduciary standard that requires the action they take to be in the best interest of their client, while a broker or insurance agent is not held to that same standard. Why? Because, according to the law, their role is viewed differently. The broker is in the business of buying or selling securities (trading) on behalf of their clients. They are held to a suitability standard that the investment is appropriate to their client. So, you might be left wondering, is there really a difference?It has been 4 years since the signing of the Consumer Protection Act—so where are we today? Unfortunately, we are still at a standstill due to opposing positions.
BMM would like to work with you to help you understand your options and choices. Contact us for a private consultation. In addition, here is some information that may help.Investment Advisors: The term investment advisor is a legal term that describes a broad range of people who are in the business of giving advice about securities (which can include stocks, bonds, mutual funds, ETFs, and annuities).
They may use a variety of titles including investment manager, wealth manager, or portfolio manager. They provide ongoing management of investments based on the client’s goals and objectives.
The client gives the advisor the authority to act on a discretionary basis, meaning that the advisor is allowed to make investment decisions without having to get prior approval from the client on every transaction. Their role should be to come up with a investment plan that meets your goals over time. It should take into consideration your risk tolerance and your needs. And you should meet on a regular basis to review the plan and your goals.
Brokers: The term broker and broker dealer are legal terms that refer to people who are in the business of buying or selling securities (called trading) on behalf of the customer. Individual sales people employed by brokerage firms (Merrill Lynch, Morgan Stanley, et al) are often called stockbrokers and are officially referred to a registered rep of the brokerage firm. The sales people can also use titles like financial consultant, financial adviser, or investment consultant. Again, they are sales people who are held responsible for the suitability of the product you buy from them.
Financial Planners: This is not a legally defined term. It generally refers to a provider who develops and may implement a comprehensive financial plan that typically covers such topics as estate planning, tax planning, insurance needs, debt management, college planning and/or retirement planning.
Confused? Not at all surprised. Maybe this will help.
How do you want to pay for those services?
· Management fee - A fee based on the percentage of assets under management by your investment advisor. When the value of your assets increases, your advisor will increase the fee they collect. However, when your account drops in value, the fees the advisor earns will also drop. This is attractive to folks who want to feel the advisor will share in the gain and feel the loss on the downside as well.
· Commissions – Brokers usually receive their compensation based on the commissions you pay each time they buy or sell a security or in addition from the product they sell you. This can be an affordable option if you rarely make changes in your account and you want more control on what you buy and why.
· Fees - Financial planners usually charge a fee for services provided. This can be an hourly fee, a flat project fee, or an ongoing retainer fee. And sometimes they may include a performance fee in addition to measure how well the account is doing. Some also can be paid if they sell you a product, like a annuity.
Last but not least is the legal component. For this discussion let me refer you to consumer advocate groups so you can do your due diligence:
Investment Adviser Association
Consumer Federation - Where to turn for help on your investments
Investment advisory services are offered through Berson Money Management, a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted. This communication is not to be directly or indirectly interpreted as a solicitation of investment advisory services to residents of another jurisdiction unless otherwise permitted. The contents of this email and any accompanying documents are confidential and for the sole use of the entity to whom they are addressed. They are not to be copied, quoted, excerpted or distributed without express written permission of the firm. Any other use beyond its author's intent, distribution or copying of the contents of this e‐mail is strictly prohibited. Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only.
