Does Your Financial Adviser Work for You Or for Their Broker/Dealer?

Article submitted by Andrew Valentine Pool.
For more information, he can be reached at 985-869-0322, or by e-mail: andy@andrewvalentinepool.com.

Many investors, who have decided to hire a professional to aid them in financial decision making, may not be aware of the two very different sides of the securities industry. Most investors are familiar with the term financial adviser that is often applied to a myriad of relationships, many having little to do with money management. In the professional money management arena, many financial advisers represent the 'sell' side of the industry where commissions are generated and decisions may not always be in the clients' best interest. These advisers are termed 'Registered Representatives' and are regulated by the Securities Act of 1933 & 1934.

Come to the 'Buy' side!!

Opposite the 'sell' side of financial advising is a little known area of money management called the 'buy' side. 'Buy' side advisers, by law, cannot accept commissions and must act as a fiduciary for the client in every situation. Fees are paid only by the client, and thus, the advisers' allegiance is only to the client and not their broker/dealer or mutual fund company. These investment advisers are regulated under the Registered Investment Advisers Act of 1940.

What should you look for in an Investment Adviser?

• Ask for actual returns of current accounts, not hypothetical illustrations.
• Check to see if that particular firm receives any compensation to use certain funds over others.
• Avoid firms who receive 'soft dollars' from mutual fund companies, etc.
• Of course, you should feel comfortable with the adviser and the method in which he or she practices.