Most investors have no idea of the risk, or the high commissions, rooted in the investments their broker, hybrid, or insurance agent chose for them. They also tend to assume all financial advisors are the same. This is far from true! Not understanding the differences in different types of advisors can cause you to miss warning signs!

According to a survey done by the North American Securities Administrators Association (NASAA), broker-dealers compensated by commissions were SEVEN TO NINE TIMES MORE LIKELY to recommend risky products like private placements, variable annuities, and non-traded REITs. Risky investments, such as these, typically pay out high commissions to brokers who sell them – some as high as 10%. The choice between selling a product that pays a commission of 0.25% versus 10% can be a challenging temptation to overcome – regardless of which product would be in the client’s best interest. The report found that “almost none” of the Registered Investment Advisors (RIAs) recommended such products.

Also, since the products sold by brokers don’t charge fees, they can give the impression that their advice is “free.” Typically, nothing could be further from the truth. If an investor is “not paying” for the advice they get, chances are there is a hidden commission cost included that is often more costly than the fee charged by an RIA.

In a September 23, 2020, article in Financial Advisor, “BDs Selling Far Riskier Investments Than RIAs, NASAA Finds,” Tracy Longo writes, “RIAs generally took more conservative investment approaches overall, ‘avoiding higher cost, riskier, and complex products. Investment advisers also reported more robust due diligence, disclosure, and conflict management practices,’ NASAA said.”

When choosing your financial advisor, we strongly encourage you to DO YOUR RESEARCH to make sure you don’t miss warning signs. Choosing a financial advisor is a major life decision that can determine your financial path for years to come. Receive your FREE “Choosing Your Advisor” checklist from an industry leading fiduciary firm, with a track record of proven investment success, that has helped thousands of individuals reach a vibrant and successful retirement by contacting our office at 859-223-6333 or sfa@spectrumalliance.com!

Source: https://bit.ly/3wPPBL0

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