Advisor or Adviser?

Merrill Lynch boosts assets, adds advisers

From Reuters:

Bank of America Corp’s (BAC.N) Merrill Lynch brokerage business provided a bright spot in an otherwise dismal first quarter for the bank, reporting sharply higher revenue and client assets as well as a net increase of nearly 200 financial advisers.

It’s subtle isn’t it? …No, not the puff-piece story.

You probably didn’t even notice it. –It might be a typo.

The increase in financial advisers.

Ya see, there’s a pretty monstrous difference between an Advisor with an ‘O’ & an Adviser. Your friendly neighborhood broker is typically called a Financial Advisor. Not an Investment Adviser. Or Financial Adviser. At least not always. And there’s a good reason. Their role is as chameleon-like as their title, changing minute to minute & without having to tell you. Slippery.

It all comes down to fiduciary responsibility, which makes self-dealing really hard. And Wall Street loves dealing to itself.

So instead, you are placed in relationship silos.

For this account? They’re your broker aka your Financial Advisor. For that account? They’re your Investment Adviser. For bonds, broker. For Investment Managers, Adviser. For mutual funds, if it’s a small amount of money– probably Broker. If it’s a big pile of cash, Adviser. Stocks? They could be an Advisor or an Adviser.

Annuity? Broker. Long Term Care? Broker (oops, I mean Financial Advisor). Financial Plan? Adviser, but to implement it– Advisor. Life Insurance? Advisor. And, tell me again, an Advisor is a Broker, right?…

Confused yet? Now add an army of bankers & institutional sales people, stuffing god knows what into the mutual funds & managers you’re Advisor (and maybe even Adviser) is probably using.

So, no matter how you slice it, the house always wins.


Section 202(a)(11)(C) of the Investment Advisers Act of 1940[3] exempts from the definition of an Investment Adviser (and therefore the associated fiduciary standard) “any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor.”

Kind of depressing isn’t it?

Yeh– make sure to consult your Financial Advisor about this one. Or maybe your Financial Adviser.


See Also:

Registered Investment Advisor- Wikipedia

Toxic Relationships


Your StockBroker: The Alpha

13 thoughts on “Advisor or Adviser?

  1. J Reeves

    Been in the business 20+ years, I can count on one hand and have fingers left over, those I’d trust or who know what they are doing, with more than 2 cents.

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  13. breachoftrust

    VERY well said. This is the best fraud (bait and switch) game in the world, making untold billions flow, from trusting and vulnerable investors, to untrustworthy dealers and salespeople pretending (falsely:) to be something they are not. Clients in my neighbourhood are getting their money back (with lots of hidden gag orders from dealers:) from this kind of fraud.

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