What Is a Registered Investment Advisor?

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 Plancorp team By: Plancorp team

Stock Broker

Registered Investment Advisor

Certified Investment Fiduciary

To the average investor, there’s little difference between the three financial designations listed above. But to those in the know, the difference can be significant, and it’s something all investors should be aware of…

Under a rule adopted by the Securities and Exchange Commission, brokerage firms that are not registered as investment advisors and seek exemption to the fiduciary standards must disclose that fact prominently. All customer documents must contain a “clear, prominent” statement to this effect: “Your account is a brokerage account and not an advisory account. Our interest may not be the same as yours…We are paid both by you and, sometimes, by people who compensate us based on what you buy…”

 

That is a very disturbing statement.

But, there’s more. While registered investment advisors are required by law to do what’s in the “best interests” of their clients (which you’d think would be obvious), brokers currently are not bound by such language. Instead, they are required only to do what’s “suitable” for their clients…language which allows them much greater flexibility regarding the investments they recommend to their client… and the fees they can earn off those investments.

At Plancorp, we are not only a registered investment advisor, but also a certified investment fiduciary…the first, and one of only a few, in the state of Missouri to earn such a distinction. As such, we are held to an even higher standard …and our certification from the Center for Fiduciary Excellence demonstrates that we adhere to the industry’s best business practices, and that our procedures meet or exceed our fiduciary responsibilities.

In the end, we believe that investors deserve to work with an advisor who sits on the same side of the desk as they do, who offers them totally objective and independent financial advice and who is paid only by them. It’s the least those in our profession can do.

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Disclosure:

This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

 

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Plancorp started with a unique philosophy: Always put your clients’ interests ahead of your own, and you’ll build a successful business. That was in 1983, but the sentiment still drives every decision we make. After 35 years of helping individuals, families and business owners plan for financial independence, our commitment to serving as financial life advocates is stronger than ever. More »