***The SEC requires broker-dealers to add the following disclosure to your client agreement. Read this disclosure, and decide if this is the type of relationship you want to dictate your financial security:
“Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations to disclose conflicts of interest and to act in your best interest. We are paid both by you and, sometimes, by people who compensate us based on what you buy. Therefore, our profits, and our salespersons’ compensation, may vary by product and over time.”
If this disclaimer appears in agreements you are signing, you should ask questions of your advisor. Obtain complete disclosure about how he or she is compensated, and where his or her loyalties lie. Then decide if the relationship is in your best interest.
Which Option is Right for You? Questions you should ask yourself:
- What am I looking for — assistance with buying/selling securities, investment advice, or both?
- How do I want to pay my financial professional? Fees? Commissions?
- How important is it that my financial professional have a fiduciary responsibility to put my interests first?
Make sure you read the fine print! Read the disclosures on a brokerage firm’s Web site and an RIA's site. For more information, visit:
www.consumerfed.org
Registered Investment Advisor:
Registered Investment Advisor (RIA) refers to an IA that is registered with the SEC or a State Securities Agency and typically provides investment advice to a Retail investor or registered Investment company such as a Mutual Fund, or Exchange-Traded Fund (ETF). Registration does not signify that the SEC has passed on the merit of a particular IA. A Registered Investment Adviser ("RIA") is an entity who, for compensation, engages in the business of advising others, either directly or indirectly, of the value of securities or of the advisability of investing in securities. They receive a management fee and do not receive commissions ("RIAs receive fees, stockbrokers receive commissions"). RIA's act as fiduciary in representing their clients and must put their client's interests ahead of their own.
ERISA - Meeting Your Fiduciary Responsibilities
Offering a retirement plan can be one of the most challenging, yet rewarding, decisions an employer can make. The employees participating in the plan, their beneficiaries, and the employer benefit when a retirement plan is in place. Administering a plan and managing its assets, however, require certain actions and involve specific responsibilities. Click Here to review the Department of Labor's booklet on "Meeting Your Fiduciary Responsibilities".
Chartered Financial Analyst (CFA)
www.cfainstitute.org
The Chartered Financial Analyst (CFA) designation is an international professional certification offered by the CFA Institute (formerly AIMR) to financial analysts who complete a series of three examinations. To become a CFA Charterholder candidates must pass each of three six-hour exams, possess a bachelor's degree from an accredited institution (or have equivalent education or work experience) and have 48 months of qualified, professional work experience. CFA charterholders are also obligated to adhere to a strict Code of Ethics and Standards governing their professional conduct.
Regulatory Bodies
SEC (Securities and Exchange Commission)
FINRA (Financial Industry Regulatory Authority)
NASAA (North American Securities Administrators Assn)
NJ Bureau of Securities
Fiduciary Standard:
The anti-fraud provisions of the Investment Advisers Act of 1940 and most state laws impose a duty on RIAs to act as fiduciaries in dealings with their clients. (Brokers are only held to the lesser suitability standard.) This means the adviser must hold the client's interest above its own in all matters. TheSecurities and Exchange Commission (SEC) has said that an adviser has a duty to:
- Make reasonable investment recommendations independent of outside influences.
- Select broker-dealers based on their ability to provide the best execution of trades for accounts where the adviser has authority to select the broker-dealer.
- Make recommendations based on a reasonable inquiry into a client's investment objectives, financial situation and other factors.
- Always place client interests ahead of its own.
Schwab
Forza is a member of Schwab Advisor Services and we utilized Schwab as our Custodian. For further information on Schwab you can access their retail website at https://www.schwab.com or advisor site https://advisorservices.schwab.com
Understanding the Difference:
Disclaimer
The material contained on this website is made available by Forza Investment Advisory, LLC, for informational purposes only. Nothing in this website is intended to be, nor should be construed as, an offer to sell or purchase securities. Some of the information on this website has been obtained from or is linked to third parties. While such information is accurate to the best of our knowledge, such accuracy can not be guaranteed.
This website is strictly informational and educational and is not to be construed as any kind of financial advice, investment advice or legal advice
FINANCIAL RESOURCES
There are important differences between Independent Registered Investment Advisors (RIAs) and Registered Representatives (Stockbrokers).
Independent Registered Investment Advisor (RIA):
- Forza Investment Advisory is an RIA and is in the business of giving advice.
- Independent RIA firms are typically not owned by another and not beholden to any platform of products or services.
- Fiduciary: legally required to put clients’ interests first (a higher standard than suitability).
- Typically fee-based or fee-only compensation for advice.
- Regulated by the SEC or states (as applicable) primarily under the Investment Advisers Act of 1940 and the rules adopted under that statute.
Registered Representative (Stockbroker):
- Brokerage firm primarily in the business of buying and selling securities.
- Registered Representative typically an employee/contractor of brokerage firm.
- Typically compensated by commissions on product transactions.
- Often experience greater profit from selling company's own brand of product.
- Held to suitability standards, not the higher fiduciary standards.
- Often “look like” an advisor in marketing and Web sites, (read the fine print).
- Regulated primarily by NASD (but also by SEC and states).
Definitions
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