Chapter 5: Your Financial Advisor’s Business Model Matters
Despite the many job titles and professional designations that exist in the financial advisory profession today, there are three basic business models for financial advisors: a retail broker employed by a brokerage firm, an independent broker, or an independent investment advisor. Although you will find exceptional financial advisors working under each of these business models, the following discussion identifies the strengths and weaknesses of each business model from the client’s perspective. Let’s compare them.
The Retail Broker
The retail broker is employed by a brokerage firm and is otherwise known as a stockbroker or registered representative. Retail brokers offer brokerage accounts. As noted in Chapter 4, brokerage accounts provide no fiduciary legal obligation to act in your best interest.
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