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started by Edgar Joyce on 22 Feb 12
started by Edgar Joyce on 22 Feb 12
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started by Edgar Joyce on 22 Feb 12
Insurance Broker-Dealers - Firms which include New York Life, ING, AXA Analysts, Equitable, and Transamerica are involved in the exchange of insurance contracts in addition to services from company to buyer. There are roughly 35, 000 "financial advisors" such firms.
Registered Investment Advisor Firms - One can find roughly 25, 000 Registered Purchase Advisor Firms. A Registered Investment Advisor (RIA) can be a firm registered directly with your Securities and Exchange Commission (SECURITIES AND EXCHANGE COMMISSION'S) or their state stock options licensing division. My firm Red Rock Wealth Management is an SEC Registered Investment Advisor Agency. Nearly half of all Registered Investment Advisor firms are likewise working with or through a good broker-dealer (at some level) however to facilitate choice and insurance transactions.
Removing a RIA's with broker-dealer affiliations meaning roughly 5% of "financial advisors" are solely within the Registered Investment Advisor model.
Which "financial advisors" are in estimates because these firms hold their employees out with the public in a financial specialist capacity, yet they may or will not be true financial advisors depending on the employment status. In fact, they are nothing more than facilitators involving brokerage transactions for insurance and investment products.
How come this industry knowledge important back and your financial future? Because there is varying levels of DEPENDENCE within the first five models for budgetary advisors. The pure Registered Investment Advisor model with out broker-dealer affiliation is the only completely INDEPENDENT model.
Being clear, many financial advisors with independent broker-dealers like LPL think about themselves independent, and provide financial services in that , manner. However there are still issues of reliance over the company that pays their commission checks. Outside of the RIA brand however, the independent broker-dealer may be the closest thing to a solely independent financial advisor practice.
To fully grasp why the national in addition to regional brokerage firms, the loan provider brokers, the insurance brokers, plus the independent brokers are never independent , simply look from who writes their paycheck. With regard to you've never been employed, you are aware clearly that your paycheck can be contingent upon fulfilling your duties for your employer as your manager describes said duties , time period - end of story.
When your employer is "calling the shots", to maintain employment and get your take-home paycheck - you fall in tier, you follow orders. You do so whether those shots the employer calls are in your clients best interests or not. To earn a residing - you follow orders. This concept is clear along with unwavering whether you're flipping burgers for McDonald's and must prepare food the specific way, or if your an income 500 CEO and accountable to shareholders and a Board of Directors. If you help someone else, you're dependent on fulfilling their perception of what your job description is.
If your financial advisor is beholden to the employer (and 95% of financial advisors are) they're addicted to that entity for income, positive aspects, and job security. If they're impacted by their employer, they must tumble in line and follow business orders.
But that's less than bad is it? 95% of financial advisor representatives being dependent on the company they work for to earn an income? It is if the company they represent is in turn beholden to maximizing revenue and increasing shareholder satisfaction. A bank checking account in good independent bank online standing is usually well enough.