Seriously, no one should disparage their competition on a fair playing field. But what if the structure of the playing field is not really fair? When I went to work for a Broker/Dealer I signed an employee agreement that said my job as a registered representative was to work and act in the best interests of the firm at all times. That was over 25 years ago. I questioned it then but didn’t have a choice if I wanted to work in my chosen field. The firm was the largest in the industry and I felt blessed to be there.
As I’ve grown in the business it has become apparent that the problem with that structure is there is very little in it to protect the client. There were some good brokers in the firms I’ve worked for but for the most part it was a competitive environment that rewarded those who made the most money for the firm. The client was just someone who made it possible for the firm to make money. Honestly there was never an emphasis on whether the client was making money or not.
As a financial professional whose guiding star when it came to recommending an investment has always been whether it would be appropriate for my hard working parents, I found that system lacking. Then came the financial crisis of 2008 - 2009. From that chaos came a calm that would become a tidal wave of positive change for clients. That change was and is the movement of money away from those established wire house businesses to the independent Registered Investment Advisor (RIA) way of doing business. What’s the difference? The Independent Advisor Representative (IAR) of the RIA has one mandate - to do what is in the best interest of the client at all times. Being independent meant that the broker/dealer was now the vendor of the advisor, and not the employer. The advisor could pick and choose any financial service that made the most sense for the client and was paid only by the client. No strings attached and no contracts. If the advice and results are not good, the client leaves and the advisor goes out of business. There was no way to ‘game the system’ because there is no system. Just good old fashioned advice day in and day out, pleasing each client one at a time.
I feel bad for the many good representatives that work at these firms that have pushed them into doing things they may never have thought of on their own. Fortunately, there is a better choice that has become more apparent to both clients and those wanting to do the right thing for them in an industry that is changing in the biggest way I have seen in my career.