Do you know the difference between a broker and an investment advisor?
Did you know there WAS a difference?
Well, there is… and it’s BIG.

Brokers have major conflicts of interest, can have hidden fees and often do not even directly handle your money.
In fact they may not even KNOW the person who IS handling your money!
Scared yet?
With your investments, your kid’s education and your retirement portfolio at stake, perhaps you should be. Read on to learn more.

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1. Conflicts of Interest
a. Commissions
An Investment Advisor, like Catherine Avery, is a fiduciary. This means she has taken an oath to always act in the best interests of the client, and to disclose any conflicts of interest that might exist between herself and the client.
A Broker has taken no fiduciary oath. If you currently work with a broker, you may be paying through the teeth without even knowing it.
Brokers often sell products that can be loaded with upfront fees, hidden fees or exit fees.
Brokers also make a commission every time they handle a financial transaction on your behalf. This set-up encourages many of them to “churn” accounts unnecessarily. (“Churn” means excessive trading.)
Your broker may also be ‘playing both sides of the fence.’ How? By telling you that he/she is not only licensed to sell stocks and bonds but is ALSO a… registered investment advisor with fiduciary capabilities!
Most people work with brokers. Most are unaware of these crucial facts.

b. Bonuses
Most brokers can qualify for a bonus at the end of the year. Guess what that bonus is based on?
1. How many clients they bring into the company and
2. How much they sell of a specific product.
This immediately creates a couple of problems for YOU, their client.

First, you potentially become one among hundreds of clients your broker brings on board and has to manage. Secondly, the bonus setup encourages brokers to push certain products at you – products you may not want, or even need.
At CAIM we are bound by a fiduciary duty to put your interests ahead of ours at all times. There are no bonuses. Instead we provide advice and recommendations that we view as being best for you and all for a simple, agreed upon in advance fee!

2. Too Many Clients

Asset gathering is the name of the game when it comes to brokerage firms. Most brokers are revered for having lots of clients and lots of assets.
Unfortunately, multiple clients means that the average broker cannot devote the necessary one-on-one time and individualized attention to clients that a private investment firm can.
In fact, after the initial start-up, you may find that you hear from your broker less and less. Most likely this is because he/she has moved on to newer clients, or is focusing more time on the bigger accounts.
One of the first questions to ask any broker you’re considering using, is how many other clients are competing for their attention. Then ask how he/she is able to keep in touch with all these people!
At CAIM we work with a limited number of clients. You will have direct contact with us and we are the sole handler of your money.

3. Who Is Really Managing Your Money? (or Transparency)
So your broker has told you they’ve got you with the greatest money manager. Or in the ‘hottest’ mutual fund. But when you call with a question, they say, ”Let me get back to you.”
Know that this is really code for, “I don’t know what’s going on – I need to call the wholesaler.”
This inability to explain exactly what’s in your portfolio can be traced directly to the chain of command set-up within a typical brokerage firm:
Client (YOU) > Broker > Wholesaler > Product Manager > Fund Manager
Compare that with the chain of command at CAIM:
Client (YOU) > Investment Advisor
Speaks for itself, doesn’t it?
The typical brokerage set-up raises a whole series of questions:
1. How is it possible for your broker to know all these money managers and still have the time to speak with you?
2. Has your broker ever met or spoken with the person they give your money to?
3. How do they stay in touch?
4. How clearly will your concerns and desires be relayed through this multi-layered system?
5. How do you know what is going on with your investments?
6. Will you, the client, have the opportunity to meet or speak with the person managing your money?
7. Who is actually managing your money?
At CAIM we do all our own research and know exactly what is going on in your portfolio. This is because WE are the ones doing the buying and selling on your behalf. We don’t hand off things and we will be able to answer all your questions.

4. Experience

A seasoned Wall Street professional has typically been in the business for at least 7-10 years.
How long has your broker been in business?
Most brokers are professional sales people. They may work for investment firms but most of their time is spent bringing in new clients while trying to retain the old ones. With the heavy pressures of a sales agenda, there is little time to actually study the markets.
What they tell you is most often material written by the research department of their firm to make them look good to you, the client!
At CAIM we are educated about, and understand, the intricacies of the market. Catherine Avery herself has over 21 years experience as a Wall St. investment advisor. We are also required by law to provide up front disclosures to all our clients about our qualifications (along with what services we provide, how we are compensated etc.)

5. High Fees

If you plan to work with the big boys, you’re going to end up PAYING – big time. In a brokerage firm EVERYONE wants – and GETS - a piece of the pie.
Compare this with the set-up at a private investment firm like CAIM. We charge clients a simple, agreed-upon-in-advance fee based upon your holdings. As further safeguard, and by law, we cannot earn any other profits from our clients, without their prior consent.


You’ve learned some of the cold, hard facts about working with brokers.
Clearly there’s a huge disparity in what you can expect in terms of service, integrity and price between a brokerage and an investment advisory firm like CAIM.
How do you feel about what you’ve learned?

Author's Bio: 

Catherine Avery is the owner of Catherine Avery Investment Management (CAIM), LLC - a New Canaan, CT based investment firm specializing in the creation and management of customized and fully diversified investment portfolios for private investors.
Catherine founded CAIM in 2007 after 25+ years as a portfolio manager with some of the biggest investment firms on Wall St. CAIM’s philosophy is that the best way for investors to achieve their goals is by taking a long-term perspective and ensuring their portfolios are well diversified.
Today Catherine is proud of all that CAIM has to offer investors i.e. personalized focus, flexibility, transparency, empathy, integrity and a low fee structure.
When she is not helping her clients, Catherine feels it is important to play an active role in her community. She enjoys educating people about investments and is a highly sought after speaker and workshop leader on topics like financial empowerment, successful investing and financial literacy for children.