This brief video will give you an overview of…
- Important information about the different kinds of investment managers
- Most of the investment managers in Prescott, and their type
- How to research investment managers before you choose one
Note: There is a complete transcript below.
I’m Will Hepburn and I’m going to help you discover
Which is the Best Investment Firm for You in Prescott, Arizona?
There is no simple answer to which investment firm is best because there are 174 different people licensed to sell investments just in our small town. So what I am going to do is categorize the firms for you by style and after you find a style that you are most comfortable with, rather that sorting through 174 licensees in Prescott, you’ll have only a handful of firms to look at. Then I’ll tell you how to check them out.
Most brokers, wealth managers, financial advisers and planners are paid by the firms they work for and will give you advice based upon what they want to sell you, not necessarily what is best for you. Firm that may do commissioned sales are licensed through FINRA, F I N R A, the Financial Industry Regulatory Association. When you see FINRA think commissioned sales.
The exception to this rule is
Registered Investment Advisers
RIAs, as they are called, can offer most of the same investment opportunities you can get from the national brokerage houses. The big difference is that RIAs can not charge commissions. Their only revenue is a fee you pay them. This means they are fiduciaries to you, and must put your interests before their own. Anyone can call themselves an investment adviser or financial adviser, but if one is Registered, they are a fiduciary to you.
We have National Brokerage Houses here in Prescott, too.
These large firms are stock exchange members and have offices all over the country. In industry terms they are called “the Sell Side” because these firms create new issues of stocks, bonds and funds, and they use their big sales forces to sell the new issues to the retail investor, which is you. Pressure on the advisers to push investments the firm owns can create big conflicts of interest. Generally, representatives of these firms are licensed by FINRA.
Independent Broker Dealers
are typically small offices affiliated with national firms, but they don’t maintain their own inventory of investments. They just broker investments – — selling you stuff owned by others. Most of these representatives are licensed to charge commissions as well as fees so it may be hard to tell which way their loyalty goes on any given transaction. Be sure to ask what hat the adviser is wearing when doing business with an independent.
Many tax preparers, from CPAs down to uncertified preparers, do taxes in the Spring and offer investments and insurance products to their clients the rest of the year. Tax preparers offering investments to clients have an inherent conflict of interest, and if they are FINRA licensed as well and can earn commissions on investment sales that is an additional conflict of interest.
We Have Many Captive Agents
These folks represent only one line of investment, and as a result, your choices with them will be very limited. Some of these firms offer only one line of mutual funds, or only sell annuities. Some national insurance chains may sell insurance and mutual funds, but you will be offered only their brand because they are captive agents and can’t help you with any other type of investment. All of these agents represent the company, not you.
Now hopefully I’ve helped you understand some of the differences in investment firms
and you have found one type of firm that suits you better than others.
Here are some links you can use to check your broker out including licensing and disciplinary actions. www.finra.org/brokercheck https://www.investor.gov/
If you still have questions about investing, feel free to call or email us as shown here.
May all your investments be good.
Will Hepburn is an Investment Advisory Representative of
Hepburn Capital Management, LLC, a Registered Investment Advisor.
2069 willow Creek Rd
Prescott, AZ 86301
Affiliations are as reported by the SEC as of April 27, 2016 and may change over time. This list is considered representative of the industry on that date, but may not have been updated. Firm categories listed are the best estimate of a firm’s activities, and some firms belong in more than one category.