Broker Check

Insane Advice from A Professional: “Independent” Advisors That Aren’t Independent

| February 01, 2019
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My first full-time job in the industry was as an investment representative for a big name investment firm The people in the company were very kind and understanding folks. They were generous enough to help train me and assist me with getting licensed.

There are many good things at that company (and good people in it), but there was a huge chasm in ethics that bothered my conscience- the dirty little secret that got swept under the rugs.

There was a conflict of interest underlying many advisors’ investment decisions- my firm had “preferred” mutual fund families that sponsored conferences, top producer events, and enabled many perks at the company.

While nobody was “forced to” do business with those six companies, there was a compensation difference between the preferred funds vs non-preferred funds.

Guess what was in most of these big companies client accounts that I’ve come across? Those same six funds!

It was like there were proprietary, self-produced products even though they were produced by other companies.

4.1 Action Step:  Ask your advisor (or an advisor you are considering) if they have proprietary or preferred mutual fund families available. How many of those are available on their platform? If they do have proprietary relationships, think very strongly about whether they may be a good fit for you due to their inherent conflicts of interest.

If yes, great! How expensive would it be to buy any position rather than the preferred families? Is there a compensation difference between the preferred funds vs other funds?

Advisory services through Capital Advisory Group Advisory Services LLC and securities through United Planners Financial Services of America, a Limited Partnership. Member FINRA and SIPC. The Capital Advisory Group Advisory Services, LLC (CAG) and United Planners Financial Services are not affiliated.

The views expressed are those of the author and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation

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