What You Need To Know About Financial Advice and The Current Market

In the financial world today, there are basically two types of advice a vailable to investors: that given by stockbrokers and or commission driven brokers, or that given by Registered Investment Advisors (RIAs). The sad truth is that most investors don’t know the difference between these two kinds of advice.
In a recent survey:
  • 54% of investors believed both stockbrokers and independent RIA’s have a responsibility to act in their best interest.*
  • 74% of investors did not understand the different obligations required of RIA’s and stockbrokers. Unlike stockbrokers, RIA’s have an obligation to act in an investor’s best interest in all aspects of the financial relationship.*
  • 79% said they would rather work with an investment advisor if they knew advisors provided greater investor protection than stockbrokers.*
I placed an ad in the October Senior Focus paper asking who pays your Advisor: a Bank, a Broker-dealer, an Insurance Company or You. The current market is a good example of where it might matter. Because an RIA is paid by you they are very attentive to your account. Given the current financial markets and how they might react to high oil prices, the homebuilders downturn, the sub-prime lending market, SIV issues, and the very large write offs of Merrill, Bear Stearns, Citi and others, makes for a potential investment mess.
An investment advisor might be more motivated to make changes in your account to protect you from a potential downturn. That being said, a recent Wall Street Journal article said “Most economist feel that the chances of a recession are only 3 8%”. I feel that with the combined issues listed above it might be a good time to take some defensive measures. Year end planning should also be reviewed and acted upon.
Willis Ashby, is a Certified Financial Planner who owns Integra Financial, Inc. a Registered Investment Advisor with offices in Greenwood Village, CO (303) 220-5525
*2006 U.S. Investor Perception Study Commissioned by TD Ameritrade
Willis Ashby, CFP® owns Integra Financial, Inc. which is a fee based Investment Advisor in Greenwood Village, Colorado. For a free consultation please call (303) 220-5525.

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