Some Advice About Financial Advice

As of July 2005, any brokerage firm that offers fee-based accounts must prominently disclose the following:

Your account is a brokerage account and not an advisory account. The interests of this firm may not be the same as yours. Please question us to see that you understand your rights and our obligations. These obligations include disclosing conflicts of interest and to act in your best interests. We are paid both by you and sometimes by companies that compensate us depending on what you buy.

This disclosure must be included by brokerage firms in their account applications and in advertisements and sales materials for fee-based accounts and must make someone available to explain to prospective clients the differences between brokerage accounts and investment advisory accounts.

Brokerage firms may not offer financial planning services or discretionary accounts except in accounts regulated as investment advisory accounts.

Key Differences
Investment Advisors

Have a fiduciary duty to act in the best interests of their clients at all times.

Provide their clients with Form ADV that describes exactly how the investment advisor does business and must disclose any potential conflicts of interest and get the clients consent.

Investment advisors may not trade with their clients as principal.

Investment Advisors are paid on an asset based fee, so their goals and interests are aligned with their clients.

Stockbrokers

Are not generally fiduciaries and may not make decisions that are solely in the best interests of the customers.

Are not required to supply their customers with any comparable type of disclosure to the form ADV.

Income may increase even if the customer’s assets go down in value.

Brokers are paid for transactions and are therefore motivated to find transactions rather than allow portfolios to remain intact.

Advantages of Working with an RIA

RIAs are held to a higher standard when it comes to putting investor’s interests first.

Disclose all conflicts of interest.

Abide by a code of ethics.

We would like to be your Registered Investment Advisor, but even if you don’t use us, you owe it to your financial health to consider finding one!

Frank Boynton-RIA