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I believe it is important to practice in our posts this crucial distinction. A salesperson gets paid by a third party---his/her principal or broker-dealer. An advisor gets paid by you, the investor, via your checkbook!! An advisor is a fiduciary and as such must place your interests above his/her own. No such personal allegiance is owed to you by the rep of the Broker/Dealer.
Know who you are doing business with---if you use VG, for example, and hire an advisor to help you with selecting particular VG funds---you have hired an advisor/fiduciary---If you use retail priced mutual funds/variable annuities via a Broker-Dealer...the broker-dealer's rep is your salesperson, not your advisor, the use of the word "advisor" on his/her business card notwithstanding!! He/she is not your fiduciary---he/she gets paid for distributing/selling the products of the third party to you!
Joel L. Frank
Pension Columnist
The Chief-Civil Service Leader
277 Broadway
New York, NY 10007
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A Salesperson By Any Other Title Remains A Salesperson An "advisor" is a fiduciary a "salesperson" is not
#3 Guest_Skeptical_*
Posted 27 January 2008 - 05:55 PM
QUOTE(Chrysopylae @ Jan 27 2008, 02:11 PM) 
I would add that a quick search of a participant's state Insurance department web site will reveal if their rep is also an insurance agent. You can always ask them for their license # as well.
Good post.
Jim
#4
Posted 28 January 2008 - 06:46 PM
While I totally agree with Mr. Frank, it is important to note that there are virtually no legal requirements with any financial services title including (but not limited to) Financial Advisor, Wealth Manager, Financial Planner, Advisor or salesperson.
Just because someone calls them self an "Advisor" does NOT mean they have a fiduciary responsibility.
Having a Fiduciary liability does not automatically make someone ethical or un-ethical. It does however reduce their conflicts of interest.
Just because someone calls them self an "Advisor" does NOT mean they have a fiduciary responsibility.
Having a Fiduciary liability does not automatically make someone ethical or un-ethical. It does however reduce their conflicts of interest.
Be of Good Cheer!
-Matthew Jarvis, ChFC
-Matthew Jarvis, ChFC
#5 Guest_Sierra_*
Posted 29 January 2008 - 05:07 PM
QUOTE(Matthew J. ChFC @ Jan 28 2008, 06:46 PM)
While I totally agree with Mr. Frank, it is important to note that there are virtually no legal requirements with any financial services title including (but not limited to) Financial Advisor, Wealth Manager, Financial Planner, Advisor or salesperson.
Just because someone calls them self an "Advisor" does NOT mean they have a fiduciary responsibility.
Having a Fiduciary liability does not automatically make someone ethical or un-ethical. It does however reduce their conflicts of interest.
Hi Matt:
Your points are well taken. If the "advisor" is being paid from the client's checkbook, the "advisor" is a fiduciary. A fee-only advisor/planner should be registered with the SEC as an "investment advisor" and must disclose in writing that he/she is so registered with the SEC as well as the appropriate state agency in the state he/she conducts his/her business.
Assuming the fiduciary status is not in dispute, the client is in much more ethical and moral hands when dealing with the fee-only advisor compared to the run-of-the-mill rep of the run-of-the mill retail distributor.
Peace and hope,
Joel L. Frank
#6
Posted 29 January 2008 - 05:33 PM
http://www.sec.gov/investor/brokers.htm
"Investment Advisers
People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business. Investment advisers who manage $25 million or more in client assets generally must register with the SEC. If they manage less than $25 million, they generally must register with the state securities agency in the state where they have their principal place of business.
Some investment advisers employ investment adviser representatives, the people who actually work with clients. In most cases, these people must be licensed or registered with your state securities regulator to do business with you. So be sure to check them out with your state securities regulator.
To find out about investment advisers and whether they are properly registered, read their registration forms, called the "Form ADV." The Form ADV has two parts. Part 1 has information about the adviser's business and whether they've had problems with regulators or clients. Part 2 outlines the adviser's services, fees and investment strategies. Before you hire an investment adviser, always ask for and carefully read both parts of the ADV.
You can view an adviser's most recent Form ADV online by visiting the Investment Adviser Public Disclosure (IAPD) website. You can also get copies of Form ADV for individual advisers and firms from the investment adviser, your state securities regulator, or the SEC, depending on the size of the adviser. You'll find contact information for your state securities regulator on the website of the North American Securities Administrators Association.
If the investment adviser is registered with the SEC, you can get Form ADV (Part 1 only) by sending an email to the SEC’s Office of Investor Education and Advocacy at publicinfo@sec.gov. You also can make a request by sending a fax to (202) 777-1027. Please note that you will have to pay a p######ocopying charge of $0.24 per page, plus tax and postage. In addition, at the SEC’s headquarters, you can visit our Public Reference Room from 10:00 a.m. to 3:00 p.m. to obtain copies of SEC records and documents. If you have a question, you can contact OIEA at (202) 551-8090.
Because some investment advisers and their representatives are also brokers, you may want to check both the CRD and Form ADV. "
In the state of California, investment advisors are required to provide clients with the ADV form and contract.
"Investment Advisers
People or firms that get paid to give advice about investing in securities generally must register with either the SEC or the state securities agency where they have their principal place of business. Investment advisers who manage $25 million or more in client assets generally must register with the SEC. If they manage less than $25 million, they generally must register with the state securities agency in the state where they have their principal place of business.
Some investment advisers employ investment adviser representatives, the people who actually work with clients. In most cases, these people must be licensed or registered with your state securities regulator to do business with you. So be sure to check them out with your state securities regulator.
To find out about investment advisers and whether they are properly registered, read their registration forms, called the "Form ADV." The Form ADV has two parts. Part 1 has information about the adviser's business and whether they've had problems with regulators or clients. Part 2 outlines the adviser's services, fees and investment strategies. Before you hire an investment adviser, always ask for and carefully read both parts of the ADV.
You can view an adviser's most recent Form ADV online by visiting the Investment Adviser Public Disclosure (IAPD) website. You can also get copies of Form ADV for individual advisers and firms from the investment adviser, your state securities regulator, or the SEC, depending on the size of the adviser. You'll find contact information for your state securities regulator on the website of the North American Securities Administrators Association.
If the investment adviser is registered with the SEC, you can get Form ADV (Part 1 only) by sending an email to the SEC’s Office of Investor Education and Advocacy at publicinfo@sec.gov. You also can make a request by sending a fax to (202) 777-1027. Please note that you will have to pay a p######ocopying charge of $0.24 per page, plus tax and postage. In addition, at the SEC’s headquarters, you can visit our Public Reference Room from 10:00 a.m. to 3:00 p.m. to obtain copies of SEC records and documents. If you have a question, you can contact OIEA at (202) 551-8090.
Because some investment advisers and their representatives are also brokers, you may want to check both the CRD and Form ADV. "
In the state of California, investment advisors are required to provide clients with the ADV form and contract.
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