Posted on 09/11/2010 7:23:04 AM PDT by george76
You would think that the roles and responsibilities would be clear and there would be a strong line between individuals who call themselves financial advisers and those who call themselves stock brokers. The obvious answer is that advisers give impartial advice based on the best interest of the client and brokers sell products as a third party.
Advisers are sworn to put their clients’ interests ahead of their own, thanks to the Investment Advisers Act of 1940.
In that case, what is a broker? The act also provides this definition. A broker is, “Any person engaged in the business of effecting transactions in securities for the account of others, but does not include a bank.” The key word is effecting, which astute readers will realize is not the same word as affecting.
It’s difficult to know who to trust, and blurred lines between advisers and brokers don’t help the average person to make informed decisions.
(Excerpt) Read more at consumerismcommentary.com ...
I went to a RichDad seminar where they pretty much put stockbrokers and financial advisors on the same level as snake oil salesmen.
Just remember who writes their checks.
No difference they are both salespeople who pretend they are financial experts.
I believe a broker has a license to buy and sell securities and an advisor does not. The advisor has to use a broker to effectuate transactions.
First, they are the same.
Second, you shouldn’t pay them anymore than you pay a chimp: a bunch of bananas.
If you have a great one, he/she has just been lucky.
The article says financial advisors must put their clients’ interests first. Not so.
Only Registered Investment Advisors have fiduciary duty.
Stock brokers only must meet the standard of suitability - is the investment “suitable” for someone in that circumstance.
I suggest, a fee-only, Registered Investment Advisor who clearly tells you he or she accepts fiduciary duty, and who has been in business for at least 10 years and preferably 15 years.
the rest of my post was cut off. Sorry. Hit post too soon.
That google link has many sources of lists of questions to ask any adviser/advisor before hiring them.
ampu
Robert Kiyosaki calling advisors snake oil salesmen? That is pretty rich. Wasn’t he real hot on real estate investing just before it blew up?
I have known seniors who used a broker or did it themselves and they have lost a lot of money, in some cases over 60%. A good advisor can help a senior protect their nest egg. No variable annuities too - avoid them. A good advisor can help them do a Roth conversion, pay a minimum of tax on it and not screw it up.
Good luck with the taxation issues of IRAs, Roth’s, 401K, investments, taking income, taking minimum RMDs, insurance, and other issues that Rich Dad and the do it yourselfer have no clue about.
Finding a good advisor is not easy. I know someone who has a friend who is a commsumate do it yourselfer using Vanguard ETFs. He would have lost 80% of he and his wife’s life savings on May 6 market meltdown if the markets had not done a “do over.” They will get him next time.
The DIY’er read money and smart money and never realize the content is based on who runs ads in the magazine - brokerages and mutual fund companies.
I have known seniors with a comfortable retirement who lost no money in 2008 due to a good advisor. I have known seniors who did it themselves or used a broker and are struggling. Most of them lost 40% or more in 2008. One lady in her 70s who had $400K and now has $100 K and is still trying to pick stocks.
Brokers sell stocks, variable annuities (crap), LPs and mortgage backed securities that blew up.
A good advisors will put together and plan and explain it to you.
Think of most brokers as Democrat, most advisors as RINO like McCain and there are a few Jim DeMint’s and Michelle Bachmann’s out there.
Pundits like Kiysosaki, Orman, Cramer, Edelman and even Dave Ramsey in many cases are as bad as brokers.
A Financial Advisor is one who will try to sell you an annuity, so he can get the most continuing compensation.
A Stock Broker on the other hand will churn your portfolio of stocks so that he can get more commissions.
Both are losers!
I mostly agree with your assessment of the big name, pop culture money pundits. The only exception would be Dave Ramsey — if you follow his advice (live frugally, pay down debt, save money aggressively), the worst that can happen to you is that you miss opportunities to make money. The others have the potential to completely destroy your finances.
Isn't it amazing how these "advisors" are usually employed by NY Life or some other insurance company?
Dave Ramsey’s get out of debt stuff is good. His investment stuff is not so good. He also sells terrirtories to advisors to get referrals from his company. He is not as unbiased as people think.
#1 Not so true.
#2 Largely true.
The biggest losers are people who have no clue what they are doing or read money and smart money and think they know what they are doing. They lose 40+% in market corrections and then live off social security.
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