Financial Advisor or Broker? Key Differences You Should Know.

* This original article was published on KTAR.com 

Volatile market swings create emotional minefields for many. Investors aren’t sure what to do to safeguard their money and often the people they assume can be trusted don’t have the customer’s best interest in mind.

In the financial arena, most professionals carry one of two designations: broker or registered investment adviser. Both deal with financial and investment products and it’s a safe bet that most people assume they do essentially the same job.

There is, however, a significant difference. Registered investment advisers are held to a fiduciary standard while brokers must comply with a suitability standard.

The suitability standard gives advisers the most wiggle room: It simply requires that investments must fit clients’ investing objectives, time horizon and experience.

In contrast, the fiduciary standard requires advisers to put client interests ahead of their own.

For instance, faced with two identical products but with different fees, an adviser under the fiduciary standard would be compelled to recommend the one with the least cost to the client, even if it meant fewer dollars in the company’s coffers — and his or her own pocket.

According to investopedia.com, an investment fiduciary maintains a position of trust. There are consequences for betraying that trust. Fiduciaries who violate regulations are subject to disciplinary action that can include loss of licenses, fines and even imprisonment. As a result, most make a sincere effort to protect the financial interests of clients.

Broker versus Registered Investment Adviser

In actual practice, here are some of the major differences between a broker and a registered investment adviser:

  • The adviser must disclose conflicts of interest and operate with full transparency. That means he is required to tell you if he is being paid a commission or an ongoing fee from a recommended investment product.
  • Once a broker sells you a product, he bears no responsibility for monitoring or advising you on that investment. A registered investment adviser must review and analyze your investments, explains analyst Brett Carson in an article for U.S. News and World Report.
  • Registered investment advisers are regulated by the Securities Exchange Commission or by state securities regulators. Brokers are regulated by the Financial Industry Regulatory Authority.
  • Some financial professionals actually carry both designations. They have a broker/dealer license and a registered investment license. In those cases, it is perfectly acceptable for a client to ask which capacity he is fulfilling in any given situation.

The fiduciary standard appears to have the upper hand in terms of providing a benefit for underlying clients. Given the strict rules for investment fiduciaries, there is little question that the fiduciary standard protects individual and institutional investors more than the suitability standard.

It can be hard for investors to know what to do and whom to trust. Understanding that a financial fiduciary is required to act in the best interest of his clients should help alleviate some of those concerns and help you feel good again about investing your money.

Features of Annuities That Are Better Than Ever Before

You may have heard the saying, “It’s not your father’s annuity. That’s because annuity products have evolved significantly throughout the past decade. This has also contributed to an environment full of mixed messages regarding the pros and cons of annuities.

We recently wrote a blog on ‘Why People Hate Annuities’ but the truth is, there are plenty of reasons why to love them too. Joint policies for married couples, death benefits and guaranteed income for the rest of your retirement are just a few. Read the full article on KTAR News  and call us to see if Annuities make a good match for your portfolio.

 

Trajan Wealth Fee-Only Financial Advisors

There are two ways a financial advisor is compensated. ”fee-only” or “fee-based. The names sound very similar, but the differences can be like night and day.

Many investments are riddled with hidden fees. As an example, do you know what a 12b-1 fee is? A 12b-1 is an additional fee mutual funds charge for advertising, or paid out as kick-backs to help acquire new clients. What’s worse, is it’s not transparent!

Welcome to Trajan Wealth.

We use no-load investments that do not charge upfront or back end sales charges and we will never use investments with 12b-1 fees. As Fee-Only, we have a fiduciary duty to put your best interest first meaning low- cost and low-fee saving programs. As a fiduciary, We are paid a flat advisory fee and have incentive to grow your portfolio. The more you make, the more we make. We are dedicated to developing unique investment strategies and helping you navigate your present and future financial life, paving a clear path for you and your financial goals.

 

Top Three Mistakes Veterans Make With Their Retirement

Serving in the United States Armed Forces is a career choice that often requires years of sacrifice, dangerous assignments with sometimes not a lot left over when it comes time to retire.

As Desert Storm veteran of the United States Marine Corps, I have experienced many benefits associated with the military. However, I have also witnessed many mistakes veterans (and civilians) make with their pensions and retirement plans. 

Assessing risk shouldn’t be scary.

Risk comes in many shapes and sizes. It is important to understand each of them as well as possible so that you can avoid negative results and feelings. For example, selecting investments outside of the risk you can emotionally tolerate can lead to stress and poor investment decisions; not properly assessing the risk that a fixed asset presents could mean inadvertently hurting your savings’ potential for growth and can impact your access to the funds when you need them. Worst of all, not realizing the inherent risks in the investments you choose completely removes your ability to hedge against them.

5 Reasons People Hate Annuities

Annuities can be some of the most polarizing products in the investment world. As retirement investments, some in the industry swear by them, while some say they are a complicated, overly expensive way to invest. Let’s take a look at five popular reasons why people hate these products, and also some reasons people love them. 

  

Hard to Understand

The annuity would probably never top a list of the most easy-to-understand investment products. For starters, there are several different types of annuity products: fixed, indexed, and variable. There is a disparate set of guarantees and risks for each type, which must be fully understood in order to make an informed decision. The work isn’t done once the product type is selected, either; indexed annuity purchase payments must be allocated among a choice of several interest crediting strategies, and variable products have a menu of mutual fund-like subaccounts to choose from. Selecting an annuity and optimizing the endless options on your own can be a complex task.

What Does Being a Dave Ramsey SmartVestor Pro Really Mean?

Dave Ramsey is one of America’s most trusted voice on money and business matters.  He is a personal money-management expert, radio personality, and author of numerous books. We are excited to be part of the SmartVestor program because Dave’s beliefs about financial education and retirement planning are rooted in the same beliefs as Trajan Wealth. By having the heart of a teacher, and not of a salesman, we dedicate the time needed to listen to your goals and educate you on your investment options. 

3 Reasons Investing In Mutual Funds Might Not Be Your Best Bet

Trajan Wealth Mutual Funds

Trajan Wealth Mutual Funds

There’s no doubt mutual funds remain one of the most popular investment choices. The better-known funds are fairly safe, have occasionally better returns and take a lot of the guesswork out of investing for the shareholder. In these ways, they are an alternative to the blue-chip stock for investors who want to either participate in an entire category or automatically diversify their portfolio without all the heavy lifting. 

However, mutual funds are not the answer for every investor. There are some situations where having the extra bulk of a fund can work against an investor. Believe it or not, there are some financial advisors who prefer to downplay these potential disadvantages because they believe the offsetting benefits of a mutual fund can make up for the shortfall.

If you have always believed mutual funds are one of the only ways to invest, read on. There are some important things to consider before choosing a mutual fund.

Six Resources to Learn More About Finances and Investing

Just because you have a Financial Advisor doesn’t mean you should stop learning about finances. Being an educated investor will help you choose the right Financial Advisor with confidence and help you articulate your financial needs. Although finding up to date, unbiased information on investing can seem like a daunting task, here are a few suggestions to stay informed.

A Random Walk Down Wall Street – Burton Malkiel
If you talk to money experts, you are likely to get several recommendations for this authoritative investing book. Mr. Malkiel is an economist and investment manager offering comprehensive yet easy-to-read guides to investing. He details the need to comprehend life-cycle saving. The book provides an excellent introduction to the world of markets and investing as well as how the two work together.

Trajan Wealth is Moving America Forward

 

Moving America Forward, a national television series celebrating the achievements and contributions of businesses and entrepreneurs across America recently interviewed Jeff Junior, President of Trajan Wealth about his long term success in helping people navigate the ever-changing economic landscape.

The show, hosted by William Shatner and Doug Llewelyn is dedicated to delivering quality educational programming honoring a variety of business owners that are moving our country forward.

Trajan Wealth was chosen as one of these businesses for their outstanding work in helping individuals and couples better understand and prepare for the challenges associated with retirement.

In this episode of Moving America Forward, Jeff Junior talks about common problems and concerns of pre-retirees and why working with an Advisor with a fiduciary standard is so important. He also shares his story of how a young Marine got started in the financial planning business and how Trajan Wealth can help people at any stage of life to secure their best financial future. In addition to retirement planning, Trajan Wealth also offers the following services:

 

  • Money Management
  • Annuities
  • Income Planning
  • Insurance
  • 401K Planning
  • Trusts and Wills

Trajan Wealth

Trajan Wealth helps our clients prepare for a successful future through financial options that are best for your lifestyle. Speak to our financial team today about your future goals and how we can help.

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