5. Know the difference between a brokerage firm and an advisory firm.A lot of baby boomers don’t understand the difference between a broker and an advisor. A broker is someone who sells something for a commission, and sells products like mutual funds, variable annuities, etc. An advisor provides investment recommendations.
Brokers and brokerage firms don’t have a fiduciary standard to the client, they only have a suitability standard to the client. That means whatever they recommend must be suitable for you, but it doesn’t have to be in your best interest.
On the other side, an advisor has a fiduciary standard to the client. What an advisor recommends to the client has to be in their best interest.
When anyone is preparing to retire they should seek the advice of an adviser following the fiduciary standard. Most people do not understand the difference. By working with a brokerage firm you will have to wonder if there is a conflict of interest.
Please comment or call to discuss.
- For boomers, it’s a new era of ‘work til you drop’ (essentialiving.wordpress.com)
- Older Workers Want to Stay In the Workforce (momentumtoday.com)
- Busted Boomers and Beyond: Living with Less from Social Security and Pensions (dailyfinance.com)