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Is Your Money Safe?

A reminder that you need to know who is watching your money, and how they are paid.

Worth reading from CNBC (emphasis added):

“Many of those charged with watching other people’s money saw their prestige crumble after the economic crisis of 2007-2009.

From bankers to insurance brokers to mutual fund and wealth managers, public confidence in their investing know-how nearly collapsed—leaving consumers wondering if their money was safe and secure enough to be there when they wanted it…

Trying to figure out what a financial planner does may be like trying to understand a stock derivative—leaving heads spinning over the many levels of service, pay and products.

For starters, almost anyone can call themselves a financial adviser and offer investment advice. There’s no training or government registration required if someone simply puts out a shingle or creates a website with the words “Financial Planner” on it.

But there is a higher level of financial planners, whose licenses and/or registration with a U.S. government agency are required when it comes to dispensing investment advice.

Those include a chartered financial analyst (CFA), certified financial planner (CFP), chartered life underwriter (CLU), and a masters of science in financial services (MSFS) among others. And some certified public accountants (CPA) double as investment advisers.

As for compensation, this too can leave heads scratching.

There’s a fee-only basis structure—getting paid for the work but not receiving compensation for selling any products to a client. Then there’s commission-only, in which advisers skip fees but receive a commission for selling financial services products, such as real estate and insurance items.”


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