Integrity Wealth Management & Insurance Services, LLC
Did you know that there are two different standards that are upheld within the Financial Services Industry? It would seem like common sense that someone who is hired to look after your investment funds should have your best interests at heart, right? Wrong.
Brokers who hold a series 6 and series 7 security licenses are held to the “Suitability” standard. The suitability standard states that a broker only needs to check the suitability of a prospective buyer, which is based primarily upon financial objectives, current income level, and age, in order to complete a commissionable sale of a financial product. Simply put, when a broker checks the suitability of a potential buyer, the broker is purley measuring how much financial product can be sold, not the true needs of the investor.
Investment Advisor Representatives, hold a series 65 security license, are held to the “Fiduciary” standard. This means that they must put the interests of their clients ahead of their own at all times by law, regardless of compensation.
An Investment Advisor Representative should have the ability to discuss:
- Investment-related tax issues
- Your personal risk tolerance and help you access it
- A plan to build for your future and legacy
- Various Levels of income and their timing
- Your personal preferences
- Capital needs
- Estate planning
- Insurance needs
- Various sources of retirement income
Some Common differences between the two standards upheld within financial services involve trading commissions. For example, commissions and incentives paid by mutual fund companies back to the broker-dealer. These inter-company inducements can also create conflicts between the investor’s requirements and the motives of the broker. When a company suggests the purchase of a proprietary product (such as a mutual fund) or an inventoried security (such as a bond) in the knowledge that the company will receive a direct and upfront commission, can that suggestion be relied upon to be in the best possible advantage of the client?
Call Integrity Wealth Management & Insurance Services, LLC today to learn more about working with an advisor who must place your best interests ahead of their own at all times.