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:
Forza Investment Advisory Form ADV-II
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Chartered Financial Analyst (CFA)
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.
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".
There are important differences between Independent Registered Investment Advisors (RIAs) and Registered Representatives (Stockbrokers).
Independent Registered Investment Advisor (RIA):
Registered Representative (Stockbroker):
***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:
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:
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