Investment Advisors and Brokers – Differences – Part I

by | Mar 5, 2012 | Podcasts, Asset Management

There are big differences between investment advisors and brokers in New Jersey (or stockbrokers, financial consultants, financial advisors, etc) and all around the United States. One group (stockbrokers and financial consultants) work for (are employed by) brokerage firms, banks and insurance companies. For 401(k) advice, look towards an investment advisor for help.

Now, investment advisors CAN also be employed by brokerage firms. In that case, these folks are often “dual-licensed” so you never really know what capacity they are working as: “did you just recommend that to me as a stockbroker, or as an investment advisor?”

However, more and more investment advisors work independently. As we discuss in the podcast, Investment advisors have a fiduciary obligation to make certain they are acting in the client’s best interests at all times. They make sure accounts such as 401(k)’s and 403b annuities are at their best. The brokerage firm employee only needs to make sure there recommendations are suitable for their client.

One other point we try to clarify in the podcast is the technical distinction is “registered investment advisor (or RIA).” A firm may be registered as an investment adviser. The employees who dispense advice to their clients are technically deemed “investment adviser representatives (or IAR).” It is a mouthful telling individuals I am an “investment adviser representative of a Registered Investment Advisor.” It is much easier to say, “I own a Registered Investment Advisory firm in Wall Township, NJ.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

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