Chapter 4:
The Type of Account You Maintain Matters

The type of investment account that you maintain will determine the extent to which you receive the protections offered by the fiduciary standard. Your account type also can affect the investment recommendations that you receive. Will your portfolio be comprised of cost-effective, tax-efficient investment vehicles? Or will it include financial products characterized by high annual expenses, surrender charges and unnecessary tax liability? Over time, these factors can make a huge difference in your account balance.

There are two basic account types: the Brokerage Account and the Advisory Account. What is the difference? Brokerage accounts must only meet the suitability standard, but advisory accounts must meet the fiduciary standard. To repeat from the previous chapter, the suitability standard provides far less protection for investors than does the fiduciary standard.
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