ROYAL OAK, Mich.--(BUSINESS WIRE)--Today personal finance website investor.com published an infographic based on its proprietary data showing that conflicts of interest and disciplinary actions are far more prevalent at hybrid financial advisor firms than non-hybrid firms.
Hybrid firms, also called dually-registered, are companies that are both a registered investment advisor (RIA) and a broker-dealer. While advisors at RIA firms are required to act as fiduciaries when working with clients, putting clients’ needs above their own, broker-dealers are held to a less strict standard.
Every month, investor.com’s Trust Algorithm downloads more than 500,000 data points for more than 17,000 RIA firms nationwide. The data comes from Form ADV, which firms are required to file with the U.S. Securities and Exchange Commission or state regulators.
For example, investor.com’s new infographic shows that:
- About 54% of hybrid firms have a record of regulation violations, compared with fewer than 6% of RIA firms.
- Almost 2% of hybrid firms have reported a felony conviction, versus 0.04% of non-hybrid firms.
“Our data shows stark differences in conflicts of interest and disciplinary history between hybrid and non-hybrid firms,” said Andrea Coombes, head of advisor research at investor.com. “The key takeaway here for anyone hiring an advisor isn’t that you need to avoid all hybrid RIA firms. The message is: Know your financial advisor. Look up a firm’s regulatory history.”
Anyone can go to investor.com and search a firm name to see that company’s complete regulatory data, all in an easy-to-read, consumer-friendly format.
“Our mission is to provide clarity around financial services for all Americans,” Coombes said. “This study shows that, when it comes to hiring a financial advisor, it’s crucial to look up a firm’s regulatory history.”
About Reink Media Group
Reink Media Group, LLC (RMG) is a privately held Michigan-based company founded in February 2009, with a mission to provide financial education and advice that puts people first before profits. RMG properties include investor.com, StockBrokers.com and ForexBrokers.com, among others.
RMG and each of its domains are B Corp™ certified.
