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We asked Chris Benoit, President of CB Capital what are the things to look for when choosing a financial advisor?

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“When selecting a financial advisor, there are three different types to choose from registered investment advisors, brokers, and dual registered advisors, which are a combination of the first two.”

“The two main questions you want to ask are, number one, whether or not they are a fiduciary. And number two, how they are compensated.”

“With registered investment advisors or IRAs, they are fiduciaries, they are legally and ethically bound to place the client interests ahead of their own at all times. Registered investment advisors or RIA’s are fiduciaries, they are bound legally and ethically to place the client interests ahead of their own at all times. So all recommendations are in the clients best interest 100% of the time. and their compensation is fee only. So no commissions, and it’s disclosed up front to the client. And fees are not related to any investment products or recommendations.”

“Brokers or registered representatives are not fiduciaries. They generally work for large broker dealers or insurance companies and are not fiduciaries meaning legally, their recommendations do not have to place the client interest ahead of their own. So they can place their interests ahead of the clients. They are paid a commission to sell products to clients. And those products only need to be suitable, not necessarily the best option for the client. This leads to the issue where the client can be sold a product that pays the highest commission to the broker, but isn’t necessarily in their best interest.”

“Dual registered advisors or hybrid advisors are registered as both fiduciary IRAs and brokers.”

“Dual registered advisors or hybrid advisors are registered as both fiduciary RIA’s and non-fiduciary brokers. They can hold themselves out as fiduciaries and do financial planning or sell investment products and earn commissions. They have the freedom to switch between fiduciary and non-fiduciary roles at will and not disclose to the client when they do so. This can even happen in the middle of a meeting.”

“The issue here is the client never knows if they’re getting advice that’s in their best interest. Although there are other factors to consider when selecting a financial advisor, whether or not they operate as a fiduciary 100% of the time should be your first step.”

“Approximately 90% of financial advisors in the United States are registered as either brokers or dual registered advisors. At CB capital, we are registered solely as a registered investment advisor. Meaning we are 100% fiduciaries, 100% of the time to all of our clients.”