Regulatory Standards
As an individual seeking investment advisory services in Minneapolis, MN, you will have several firms to choose from. How do you make sense of the different options? First, ask yourself, would you like advice from someone who is objective and looks at what is best for your situation? Or do you want advice from someone who could be influenced by commissions received from financial product sales?
Two of the more common types of investment advisors that you may run into are registered investment advisors (RIAs) or broker-dealers. Registered investment advisors are registered with the Securities and Exchange Commission (SEC), and they are fiduciaries. Fiduciaries are required by law to do what is in your best interest. Fiduciaries can focus on helping you grow your wealth. Most broker-dealers are in the business of buying and selling securities. They may have conflicts of interest if they receive commissions on the products they sell. They are mandated to adhere to a “suitability” standard which only requires that investments be suitable to the investor’s circumstances. The fiduciary standard is more rigorous than the suitability standard.
Fee Structure
You should also ask about any fees you will be charged throughout the year. Another difference between registered investment advisors and broker-dealers is in compensation. Registered investment advisory services in Minneapolis, MN are fee-only. They charge either a percentage of assets under management, a flat fee or fixed rate for services to clients directly. Broker-dealers may be fee-based, meaning they may also charge fees, but additionally, they may also earn commissions on products they sell to you. When you choose investment advisory services in Minneapolis, MN, we recommend that you select a fiduciary and fee-only advisor.
