BY EMILY HOLLIS
Think there’s only one route to getting investment advice for your credit union? Think again. Registered investment advisors offer a unique approach over broker-dealers. Credit Union BUSINESS’s CFO Currency expert breaks down the differences in their investment advising styles so you can decide which is a better fit for your CU.
There are two ways credit unions can obtain investment advice: working with an SEC-registered, fee-based advisor or through a broker-dealer. CFOs and investment managers are busy people with a lot on their plates, and tapping into specialized expertise can help to ease that burden while saving time and money. But there are big differences between working directly with a broker vs. a registered investment advisor (RIA). Only RIAs are guaranteed to offer unbiased opinions, both because they aren’t dependent on commissions and because they have a fiduciary responsibility to make recommendations that serve the client’s best interests.
Credit unions frequently receive calls from brokers, giving advice on various investments they want to show and proposing to place transactions. RIAs offer another approach. Here are a few of the key ways RIAs and traditional broker-dealers differ:
- Fee vs. commission – Because investment advisors are compensated on a fee basis (or as a percentage of the total assets they manage) as opposed to receiving commissions from sales of specific securities, clients have the assurance of knowing their advisor will not recommend a particular investment unless s/he truly believes it is worthy – and fits the client’s portfolio.