Will the real 'financial advisor' please stand up?

Who are financial advisors?  Are they your stock broker?  Insurance agent?  Annuity salespeople?  CFP's, CLU's, ChFc's, etc....? There is alot of unknown and confusion about this very subject among most Americans. 

Although there are some 230,000 men and women in the financial services industry that may call themselves a 'financial advisor' (and even have alot of letters behind their names), there are recent laws that clearly help to reduce the confusion that has been caused in the mind of the consumer.

Our firm and its' advisors have gone to great lengths and considerable expense to separate ourselves from the rest of pack in this regard.  Recent legislation attempts to clear up the issue by first of all helping the consumer understand who is NOT an advisor: 

Anyone who receives a commission from mutual funds, stocks, bonds, or any other form of registered security is acting as a broker, and is NOT a financial advisor as recognized by the law.

A broker may receive a commission from the sale of a mutual fund or from a transactional relationship with the consumer.  They also may receive ongoing compensation from the company to keep the money in that fund family.  Because his/her motives do not have to be in allignment with the consumer, he is acting out of a general standard of 'what is suitable' for the client.  As of July 2008, brokers and registered representatives of all firms, including the major national firms, will have to disclose that their interests may be in conflict with what is best for the client.

Finanical advisors are held to a much higher standard.  We are still held to a high regulatory standard, but are also legally required to always act in the best interest of the client.   We do not earn commissions from the sale of marketable securities.  We do not receive any form of compensation, direct or indirect, from mutual fund sponsors or other investment suppliers.  Typically, our earnings come from fees charged as a percentage of the amount of assets we manage for our client.

When you seek advice on your life savings, it seems to us that finding an independent financial advisor, whose number one concern must be protecting your interests, is a far better course.