How does being a "Registered Representative of Raymond James Financial Services" impact the services that an advisor can provide?
I'm going to hire a financial advisor. I'm looking at the website for one of the firms I am considering working with and it says their advisors are CFPs, they hold a couple of securities licenses and they are a Registered Representative of Raymond James Financial Services. What does this mean? If I have an account at Fidelity, can my advisor still work with me? Is there advice influenced by the fact that they're represented by Raymond James?
Most likely they would not in that case work with your Fidelity account. The financial world is confusing and the basis for advice stems from the legal structure of the firm you are talking to.
I work for a Registered Investment Advisor with no securities licenses, which means I can be compensated for advice, but I can not sell investment products. That removes a third-party that regulates the representatives who sell products.
Fidelity representatives will also be licensed.
Firms can be RIAs and have securities licenses, but typically the brokerage that employees the licensed Registered Representative will still have a say over the advice the advisor gives on the RIA side. Yes, there will not only be an influence but an outright regulation of recommendations.
You ask a great question that few understand. A "registered representative" of ABC brokerage firm, whether Raymond James or Fidelity means they have their Series 6 or Series 7 license and they represent their firm, not you. In fact if you ask them "do you represent me or your firm" they are supposed to answer "I am a registered representative of XYZ, I represent my company." Therefore there is a conflict of interest. Doesn't mean they aren't honest or couldn't do a good job, just that you need to be aware of the conflicts of interest. In my opinion, life is too short and I want to eliminate most or all of the conflicts of interest.
In fact, this is what the whole new "Fiduciary Rule" is all about regarding retirement accounts. Up until now, a "broker" or registered representative only had to meet the "Suitability Standards." So they could sell you a higher commission product or fund even if there is lower priced class or share of the exact same fund.
For these reasons, you may want to consider a fee based only Registered Investment Advisor, Series 65 or 66, who is NOT dually registered and also has their Series 6 or 7. This means they are a Fiduciary and you are only paying for their advice. They only get paid by you and do not share in any commissions, trailers, or other fees of any kind. Then you custody the assets a custodian that the advisor has an arm's length relationship with but doesn't share fees in any way or gets paid by the brokerage firm itself. This way you are separating the advice from the custody and there are no conflicts of interest.
For instance, I do not have my Series 7 as I dropped it in the late 90s early on when the Series 65 was made available and you no longer had to be affiliated with a Broker/Dealer (custodian) like Fidelity, Raymond James, Merrill Lynch etc.. We use either Charles Schwab or TD Ameritrade for custody and the client can chose which one he/she prefers. Each has their strengths and weaknesses but they are both very good discount brokerage firms as is Fidelity.
Regarding your question as can a Raymond James broker (registered representative) manage your assets at Fidelity, the answer is almost certainly no. He/she is a captive agent of Raymond James. But even at Fidelity, if you are using a Fidelity "advisor" there are conflicts of interest that you need to be aware of. This is why I believe it is a better business model to separate the advice from custody. It is separation of duties for your protection. And then you never have to wonder as to intentions.
Hope this helps and best of luck, Dan Stewart CFA®
It is highly unlikely that you would be able to keep your account at Fidelity if you chose to work with them but have to transfer the account to Raymond James. As Registered Representatives they can work both as a fee only, fiduciary adviser and as a traditional broker that charges commissions. Make sure you are clear on how they are being compensated and ask "Are you acting as a fiduciary on all of my accounts?" Someone working at a firm like Raymond James are not fully independant but most follow direction from the company.
I hope this helps.
The Raymond James adviser will want to transfer your account to the RJ brokerage platform. They would not, in that case, manage your Fidelity account. The financial world is simple if you use a fee-only Registered Investment Advisor that has to be a fiduciary.
I'm an Investment Adviser Representative and Partner at a Registered Investment Advisor with a Series 65 license, which means I can be compensated for advice, but I can not sell investment products. That removes a third-party that regulates the representatives who sell products and eliminates commissions, thus lowering costs for you.
It means that Raymond James pays them. Raymond James advisors are some of the best in the business, and having the CFP designation means that they are serious about their trade. Their advice may be influenced by what Raymond James says what they can or can't do, but usually those guys are top notch.