Here’s What We Call The Financial Battlefield

When you work with any person in the financial sector, they represent one of these 4 areas below. If you are interested in securities, stocks and bonds, you’ll either work with a Broker or a Registered Investment Advisor. If you are interested in protected, guaranteed products, you either work with a bank or insurance agent. It’s important to understand what financial “arena” the person you are working for represents, they may have some bias that you aren’t aware of. These two sides are in a battle for your money.

Risk vs. Safe


Let’s talk about the Risk side first.

The risk side of this battle wants you to invest your money in the market, arguing higher potential returns and a way to beat inflation over the long term. Even when investing on the risk side, should you work with a Broker or a Registered Investment Advisor? You’ll notice a big difference between the two. It comes down to Suitability vs. Fiduciary. So what does that mean anyway? You’ll learn a lot from the answers to these questions.


Suitable Regulation

Brokers represent the companies that they work for, they work for them, not their clients. They get paid by those companies and offer products for sale from a range of products carried by the company. They can sell you any product that is suitable, meaning it matches the clients’ investment objectives.
Brokers make their money through investment transactions. They get commissions paid from the company they represent based on the product sold. Brokers earn different commissions for different products, which can make them biased towards certain investments over others. Brokers are not obligated to work solely in their clients’ interests. The more trades they generate the more commissions they can earn, which is not always in the best interest of their clients’
The primary business function for a Broker is executing transactions in securities. They don’t get paid for advice, rather, they get paid for selling products. So long as a product is suitable, a Broker can recommend the product that that produces the highest commission.


  • Primary business function is executing transactions in securities
  • Compensation is earned in the form of commissions and markups based on product sold

Registered Investment Advisor

Fiduciary Regulation

Registered Investment Advisors work for their clients, not a brokerage company. When working with an Investment Advisor, a client will sign a client agreement that details full disclosure of the fees, charges, and services for their work that they will do. They are regulated to give advice based on their clients’ best interests.
Investment Advisors get paid in the form of fees for investment advice (disclosed in the client agreement) and/or a fee based on the amount of assets managed. That fee is not determined by which securities the client holds – they make the same amount of money no matter how the money is invested, which eliminates commissions biases.
The primary business function is giving advice. They don’t get paid by selling products, rather they get paid by providing advice to the client and managing their assets. Under the fiduciary regulation, an Investment Advisor must recommend investments that are in your best interests.


  • Primary business function is giving advice in the best interest of each individual client
  • Compensation is earned in the form of fees or other charges based on the amount of assets managed

LifePlan believes the fiduciary model of disclosure and transparency is in the best interests of the client. We operate and are regulated as a Registered Investment Advisory Firm.

Watch This 2 Minute Video Explaining The Difference Between A Broker And A Fiduciary

video source: http://www.youtube.com/watch?v=Dg5RRMAc1GY

What about the safe side?

The safe side of the battle wants you to invest your money in guaranteed, principal protected accounts, arguing that you shouldn’t risk losing your money, it is better off being more conservative and safe then to rather worry about volatility. If you want to invest on the safe side, there are two places you can go if you want to invest your money in a guaranteed account, the bank or an insurance company. Each offer various products that are principal protected, which means they are insured so you don’t lose money. Some of the products you’re familiar with, savings accounts, checking accounts, life insurance, fixed annuities, etc. However, banks and insurance agents are both under a suitability regulation. Which means they represent a company, not the client.

Just like a Broker, this suitability regulation could cause some biases and conflicts of interests.

Does this mean you shouldn’t invest your money in safe products? Of course not, it just means you need to be aware of potential biases and conflicts of interest.

The Truth Is, Most People Need A Balance.

Some Money Safe and Some Money at Risk.

This is the biggest problem you face when searching for advice. Who ever you go to, they will be biased towards the products and services they sell. Speak to a broker and they will recommend market products, speak to an insurance agent and, of course, they will recommend insurance products.

Where can you go for conflict-free advice? Who can be your advisor that you trust?


This Is The LifePlan Difference

We recognize the need for money that is safe and money that is at risk, which is why we do both. We are a Registered Investment Advisory Firm of North Carolina, which allows us to put our clients first. We build retirement plans with our clients best interest in mind. If the best thing for them involves insurance, we are licensed for insurance as well. If the best thing involves securities, we handle that too.

This gives us the freedom to truly build retirement plans that are in our clients best interest. We love what we do and are proud to be the trusted advisor our clients deserve.

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