The choice of whether to service clients while wearing the hat of an IAR (an Investment Advisor Representative) or that of a Registered Investment Advisor (Registered Investment Advisors are typically not individuals) or to service the client as a Registered Representative (RR) depends on suitability and best interest in and of itself. In many situations, a commission-based model may offer the best long-term value to clients, for example for a client that expects to buy-and-hold and is most concerned with long-term appreciation of capital. The main advantage of an Assets Under Management (AUM) fee-based relationship is ongoing monitoring. Conflicts of interest such as an advisor buying or selling the security that they recommend rarely affect non-wealthy clients because the volume the client and advisors trade is insufficient to move most markets. Also most true conflicts cannot be cured with disclosure. The ADV Part 2 must be provided to the clients due to the brochure rule. Regulation: Best Interest requires a quantitative basis for recommending and requires that the firm and RR understand and believe the product is suitable and in client's best interest. There are a lot of misleading points in this article.

The choice of whether to service clients while wearing the hat of an IAR (an Investment Advisor Representative) or that of a Registered Investment Advisor (Registered Investment Advisors are typically not individuals) or to service the client as a Registered Representative (RR) depends on suitability and best interest in and of itself. In many situations, a commission-based model may offer the best long-term value to clients, for example for a client that expects to buy-and-hold and is most concerned with long-term appreciation of capital. The main advantage of an Assets Under Management (AUM) fee-based relationship is ongoing monitoring. Conflicts of interest such as an advisor buying or selling the security that they recommend rarely affect non-wealthy clients because the volume the client and advisors trade is insufficient to move most markets. Also most true conflicts cannot be cured with disclosure. The ADV Part 2 must be provided to the clients due to the brochure rule. Regulation: Best Interest requires a quantitative basis for recommending and requires that the firm and RR understand and believe the product is suitable and in client's best interest. There are a lot of misleading points in this article.

user
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assistant