{"id":426,"date":"2013-03-06T06:14:06","date_gmt":"2013-03-06T14:14:06","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=426"},"modified":"2024-08-28T07:29:26","modified_gmt":"2024-08-28T11:29:26","slug":"financial-advice-versus-financial-recommendations","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/advisors\/financial-advice-versus-financial-recommendations\/","title":{"rendered":"Financial Advice versus Financial Recommendations"},"content":{"rendered":"

\"\"<\/a>Did you know there is financial advice and financial recommendations and the difference between the two may determine when you retire, how you live during retirement, and your financial security late in life?<\/p>\n

So what is the difference between advice and recommendations? In the real world the answer is not much. I can advise you to do something or I can recommend you do something. There is no difference. However, there are huge differences in the world of personal financial advice that impact you. <\/p>\n

Financial Advisors<\/strong><\/p>\n

In the world of personal financial advice, only professionals who are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs) are supposed to provide advice. That is because their registration permits them to provide financial advice and ongoing services for fees. For example, the professional advises you to invest in a particular mutual fund. So real financial advisors provide financial advice<\/strong><\/a> and they work for fees. That is pretty straightforward.<\/p>\n

Sales Representatives<\/strong><\/p>\n

Professionals who hold securities licenses <\/a>(Series 6, Series 7) are permitted to make investment recommendations when they \u201csell\u201d investment products. For example, the sales representative recommends you buy a particular mutual fund. If you follow the rep\u2019s recommendation, he is paid a 5% commission for his sales efforts. So reps sell products and they work for commission. This is also pretty straightforward.<\/p>\n

The Need for Deception<\/strong><\/p>\n

A lot of investors are not comfortable following the investment recommendations of sales representatives. Wall Street is aware of the concern so its companies came up with a simple solution. Their sales reps tell investors they are financial advisors, hence all of the confusion. This reduces sales resistance and it works because it is verbal, there is no record of what was said, and there are no significant differences between financial advice and recommendations.
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