Bullshit on Stilts: Tackling the bullshitology of financial decisions.
Join two financial brains turned podcast hosts unleash their wit and wisdom drawing on vast financial backgrounds. Using highly-tuned bullshit sniffers they call out the clichés, crap spackle and flapdoodle spewed by so-called experts across the landscape of financial advice. Identifying as doctors of bullshitology you can count on your hosts to bring you a lively if not deadly mix of serious analysis, hijinx, and tomfoolery. All within a 99.1% bullshit free safe space.
Bullshit on Stilts: Tackling the bullshitology of financial decisions.
Financial Advisors: Who's Who and What Do They Do
Ever wondered why your financial advisor recommends certain products? Join us on Bullshit on Stilts as we unravel the confusing world of financial advisors and insurance agents. We start with a deep dive into the various roles within the financial services and insurance industry, decoding titles like registered representatives, investment advisors, and wealth managers. We'll also shed light on insurance agents, contrasting the limited options of exclusive agents with the broader choices offered by independent agents. Learn about the standard of care these professionals owe their clients and why "reasonable care" often falls short of a fiduciary duty.
Next, we shift our focus to the intriguing world of investment brokers and their compensation structures. What's the real difference between commission-based and fee-based models? And how do Registered Investment Advisors (RIAs) and Independent Advisor Representatives (IARs) fit into the picture? We'll also explore the critical role of fiduciary duty, backed by regulatory oversight from authorities like the SEC. Using the infamous Bernie Madoff scandal as a cautionary tale, we highlight the pitfalls of relying solely on fiduciary status for trustworthiness and professionalism.
Finally, we demystify the alphabet soup of financial certifications and roles. From Chartered Financial Consultant (ChFC) to Certified Financial Planner (CFP), we explain what these designations mean for you. We also discuss the potential conflicts of interest that arise when professionals hold multiple licenses, such as when insurance agents double as brokers. By understanding these distinctions, you'll be better equipped to evaluate the advice you receive and ensure that your financial goals are met with integrity and professionalism. Tune in for a blend of serious analysis and lighthearted banter that aims to keep you both informed and entertained.
Developing your financial bullshit sniffer one episode at a time.
Welcome to Bullshit on Stilts, a podcast hosted by two guys with vast financial backgrounds and great bullshit sniffers who call out the cliche crap, spackle and flap doodle spewed by so-called experts across the landscape of financial advice, identifying as doctors of bullshitology. You can count on your esteemed hosts okay, maybe knuckleheads to bring you a lively, if not deadly, mix of bullshitology. You can count on your esteemed hosts okay, maybe knuckleheads to bring you a lively, if not deadly, mix of serious analysis, hijinks and tomfoolery, all within a 99.1% bullshit-free safe space. Let's get after it. Okay, welcome to Bullshit on Stilts. Today, we're going to be focusing on those professionals that practice within the financial service and insurance industry, and when we say financial services generally, we imply it's financial service and insurance itself. So that's what we're going to be talking about. Mark, set us up, shut up and sit down.
Speaker 2:So let's define what is a financial advisor? Really, it's a catch-all term. It's a generic term for insurance agent, registered representative or broker, registered investment advisor or an RIA, an investment advisor rep, an IAR, and for non-legal terms, financial consultant, wealth manager and financial planner. So let's get into these.
Speaker 1:Absolutely, because there's lots of acronyms and we want to enjoy those acronyms properly. I feel like I'm back in the army.
Speaker 2:At ease, soldier. Well, we do. We don't want to bring acrimony to the acronyms.
Speaker 1:Oh, that's pretty good, all right. So first up on the agenda, I think you spoke of insurance agents, and when we talk about insurance agent, we're talking about a professional that specializes in transferring financial risk from you to an insurance company itself, depending on what risk. So talk about the insurance agent.
Speaker 2:Well, they're in the business of recommending and selling insurance and insurance-related investment products to their customers. In general, there are two broad categories of insurance agents independent agents, who represent several insurance companies, and exclusive agents, who represent only one insurance company. In both categories, the agent acts as a representative or agent of the insurance company when dealing with customers.
Speaker 1:Yeah, and when you talk about like the exclusive agent, I think any more. In the industry agents there are some like life carriers, life insurance companies, where you might be an exclusive agent but wink, wink, nudge, nudge, you can still distribute and or sell other insurance companies policies to your client If it's a better fit with the structure of insurance. Today, when it comes to property casualty, like I don't know, a state farm, allstate, something like that they tend to be truly purely only that insurance that they can sell. So if there's a better deal out there less expensive, better performance, more coverage they don't have the option to go ahead and share with you those more competitive solutions, all right. So what's the implication there? Implication is they have a huge conflict of interest. There's been an alarming increase in the number of things you know nothing about From a standpoint of if you come to Burger King, you want that sandwich. There's a Whopper here. Don't ask for a McDonald's, don't ask for Wendy's, don't ask for Taco Bell. It's only one thing.
Speaker 2:Here you go again with fast food. Wendy's, don't ask for Taco Bell, it's only one thing. Here you go again with fast food. I know, it's just something.
Speaker 1:I just love that stuff. The world, according to Kelly, within the analogies of fast food Stay tuned, it's going to get even better. So, when we're talking insurance agents, what is their standard of care right? What is their duty with regards to taking care of your interests versus their interests versus, let's say, the company they work for?
Speaker 2:All right. Generic language on that reads kind of like this An insurance agent or producer has a duty to use reasonable care, diligence and judgment in procuring insurance.
Speaker 1:Well, that cleared that up, didn't? It Sounded like that was off the cuff. So, bottom line, their standard of care is not fiduciary, no, it's reasonable care. Say it again.
Speaker 2:No, it's reasonable care. So here's an important note Even if you rely on an agent's expertise, it's your responsibility to read through the policy documents for discrepancies Interesting, because at least in the state of Michigan here, if you received your policy it was delivered to you and that's called constructive receipt of your policy. It is on you to read through that because you have a free look often. Yeah.
Speaker 1:Usually so it's on you. Yeah, usually so, it's on you, yeah, yeah. So then, given this standard of care, that's sounds more like suitability than it does a higher level it is a suitability.
Speaker 2:It's a suitability.
Speaker 1:So, within this standard of care, who's who's looking out for Mr and Mrs Consumer out there? Who's regulated they're?
Speaker 2:regulated by the states in which they do business, kelly Interesting. So agents who sell mutual funds are variable annuities. In addition to the states, they're also regulated by the Financial Industry Regulatory Authority, or FINRA FINRA that's what it's called and then you have the National Association of Insurance Commissioners or the NAIC.
Speaker 1:Yeah, so basically each state insurance regulator is a member of the National Association of Insurance Commissioners, right, naic, and they basically create or develop or recommend a best practice for insurance companies, agents and so forth to follow and then within every state, each state can choose to adopt or not to adopt that, let's say, modeled regulation or approach to doing business. Yes, okay, so when we're talking, we're going to wrap up this insurance agent side and again we're talking in general, whether it's property, casualty, health insurance, life insurance, disability insurance, all sorts of insurances how do they get compensated?
Speaker 2:It's commission-based and some insurance products allow the agent to opt for an ongoing fee. I don't know how popular that is anymore. Instead of the upfront commission.
Speaker 1:Yeah, I think that ongoing fee is most popular where you have fee-only financial professionals that everything they do is fee-based. Again, I don't know how prevalent that is, but I do know fee-only advisors. If they're not selling fee-based insurance, they probably aren't a fee-only advisor, right? All right, so let's move on to registered representative, otherwise known as investment brokers. Give us kind of the lowdown. And who these people are.
Speaker 2:I was one of those people because I came into the industry as a registered representative for a large brokerage investment banking house. So brokers are legally referred to as registered representatives, meaning they are properly licensed and registered to buy and sell securities for their customers through the company they represent, and the company is known as a broker-dealer. And brokers typically earn a commission when buying and selling securities inside their customers' accounts. Now here's a distinguishing factor Registered reps provide non-continuous, point-in-time investment recommendations before a buy or a sell or transfer within a mutual fund family, which we discussed in our last podcast. Before they can be transacted, the registered rep must receive approval from the account owner. This type of account is referred to as a non-discretionary account.
Speaker 1:So when they're incidental advice, essentially, what do you mean by that?
Speaker 2:It's not ongoing and continuous, Not ongoing. Thank you.
Speaker 1:Yes, the only time you get feedback from a broker technically would be if they reach out to you and talk to you or you call them, in which case they can or they will give you feedback as a sounding board.
Speaker 1:Maybe that's not the best thing, mark. Maybe what we should do is do it this way. That's sort of that relationship with the broker. Yeah, usually. Going back to our last episode, when we were talking about what are your total costs? Right, there's the fifth number on the Fab Five on investing. Right, we talked about A, b, c share mutual funds.
Speaker 2:No, Kelly, you did. Yeah, I did talk about that, didn't I?
Speaker 1:That was pretty good man actually.
Speaker 2:Thank God there aren't X, y and Z funds.
Speaker 1:I don't know what you're talking about. I'm going to start a filibuster now with A share, C share Okay.
Speaker 1:So the people that we're referring to when we're talking about A, b, c share mutual funds are brokers. Yes, okay, and so a broker nowadays could actually pretend or, let's say, earn money, sort of like the next two you're going to talk about the registered investment advisor, investment advisor rep, because if I sell you a C-share and I'm getting a 1% commission every year that you're invested in that C-share, doesn't it look, smell and taste just like a 1% fee from an advisor, with the exception of advisor will give me ongoing supervision, advice, monitoring and so forth.
Speaker 2:Yes, in fact, it's not even a fairness issue. It is the way it is.
Speaker 1:It's how the industry has evolved, right yeah, fair or unfair, that's just the way it is Right right. So a broker can work with someone and a broker could be an insurance agent with a broker's license and can work with someone and sell them loaded mutual funds for their retirement accounts, life insurance policies for their life insurance needs and or cash value life insurance as a way to accumulate cash value in a life policy over time.
Speaker 2:Sure, okay, typically the products and the investments that they offer we've talked about, yeah, individual stocks and bonds, mutual funds, exchange traded funds, options, ipos which are initial public offerings annuities and other insurance-related products, if they're licensed to sell insurance.
Speaker 1:Okay, got it this guy was good. All right. So when we're talking about registered reps, brokers, what's their standard of care? What are they responsible or have to make sure they do on behalf of their clients?
Speaker 2:An insurance agent or producer has a duty to use reasonable care, diligence and judgment in procuring insurance With registered reps. It is suitability, let the games begin. So under the suitability standard of care, the registered rep or the broker has a regulatory obligation to have a reasonable basis for believing the strategy or the transaction is suitable for their client's needs, financial situation and risk tolerance, investment experience, etc. Interesting.
Speaker 1:Let's talk about the first investment I made. In a world fraught with confusion, one man will break his silence.
Speaker 2:As a young lieutenant in the army and you still haven't gotten over that. I remembered.
Speaker 1:So when I went in to see an advisor that specialized in working with military, he asked me what I wanted to do and I said I'd like to grow my money. So of course that gave him the suitability definition that he was looking for growth investment. Okay, I'm young, I can take on growth volatility, and what he was responsible to do is find a growth-oriented investment. In this case it was mutual fund and I believe it was the Janus Growth Fund and this was back in 1992. And of course, growth was on a tear for the next decade.
Speaker 2:And Janus was, I think, about 60% of the dollars were going into Janus Absolutely.
Speaker 1:So, based on the idea of growth, it was perfectly acceptable for him to recommend Janus Growth and I think he recommended a couple. There might have been a value option there, but my brain's like I don't care about value, I want my stuff to grow, so let's do the Janus Growth. That's how I ultimately made the decision and he didn't suggest one way or the other. Obviously he was going to get paid either way and these were A-share mutual funds. So the first year of my life investing about 5% of what I had. Back then it was more, but 5% of what I invested went right into his pocket. I saw the deductions in my investment amounts, my principal being invested monthly and that's what he earned.
Speaker 1:And of course, I ultimately I think they hit a skid in a couple of years. It might've been 94. And I think I pulled out of it like a knucklehead and so forth. But just to give the sense, the advisor, the broker they don't really have a duty to give me the best growth fund in my example, in my story, with the lowest costs, with the best volatilities and all these other things. They just got to meet me with the overall, let's say, definition of the investment. This is a growth fund. He wants growth matched.
Speaker 2:Right. So suitability does not protect you from unreasonable or nefarious business practices? Perfect, it doesn't. So we go back to the character. Yeah, you got it dude. So I've known brokers that operated more as a fiduciary just by their inherent character than fiduciaries masquerading as a fiduciary with a broker mindset.
Speaker 1:Interesting, or at least less than honest, mindset we're doing a podcast.
Speaker 2:So if we don't have incendiary claims in here that are over the top. Nobody's going to listen. I forgot the tarn feathers brother, you suck Okay.
Speaker 1:So then let's talk about who is looking out for the consumer. When we're talking about investment, bro, who's doing the job?
Speaker 2:Well, we can talk about who's out there and then we can follow up with that with a shorter list of who's really doing the job.
Speaker 1:Yeah, let's talk about who's doing the job of taking care and protecting consumers.
Speaker 2:Well, they're regulated by the state securities regulators in each state in which they do business, and they're also regulated by FINRA, the Financial Industry Regulatory Authority, and also the Securities and Exchange Commission, or SEC.
Speaker 1:Most brokerage houses. I think every one of them, every investment advisor, every insurance agency has someone, maybe two or three people that their job is to be the extension of the regulators by ensuring that clean business is being done, known as compliance. Yes, those are the ones that are in the trench lines up front with all the agents, advisors, brokers, and they're the ones that are responsible, sort of, to make sure that business is being done proper, clean and effective business.
Speaker 2:Right, and that's why the industry is a lot cleaner in terms of good business, bad business, and clean business meaning good business, right and that's why the industry is a lot cleaner in terms of good business, bad business and clean business, meaning good business is because of internal compliance.
Speaker 1:So, lastly, how are these investment brokers compensated? How do they make money?
Speaker 2:Commissions off of the products that we had mentioned mutual funds, individual stocks bonds, exchange-traded funds, individual stocks bonds, exchange-traded funds and I'm saying commissions generically.
Speaker 1:So, just like the insurance agent, they earn commissions. Yes, Different products albeit, but their structure of earning money is through a commission and typically those are upfront paid within the next 30 days of the sale of whatever product we're referring to. And that's a commission. They're not going to get paid a heck of a lot of money next year or the following year and I think we've covered that in C-shares maybe a little bit Hell. Yeah, that's what I'm talking about and I know, in life insurance there's a little bit, but nothing significant.
Speaker 2:It's a commission that is paid and the standard of care, the scope and intent or intention of the standard of care, is the same. The wording is just different.
Speaker 1:Okay, so let's get into the next. Really two, right? The registered investment advisor, known as an RIA, and the independent advisor representative, known as an RIA, and the independent advisor representative, known as an IAR. Help us pull this apart real quick, mark.
Speaker 2:All right. An RIA registered investment advisor can be a standalone operation, its own entity, or it could be a separate entity, subsumed within but separate from a large broker, dealer or bank. The IAR is the individual who operates within that RIA, offering ongoing and continuous fee-based advice. Are you lost yet? Are you lost?
Speaker 1:yet Right. So I could work for Bank of America, bank of America owning a registered investment advisor. I could be licensed as the employee working there as an independent advisor representative. I might just for short say I'm an investment advisor, I'm an advisor, but technically that gives me the authority now to charge what for my services Ongoing fees, ongoing fees, so it's a fee-based account.
Speaker 2:Yes, and you can also be registered within Bank of America as a broker registered representative receiving commissions, yeah, so this gets real confusing, right?
Speaker 1:It does Now riddle me this Batman. Could I also have insurance licenses and then recommend insurance to clients, even though they're at Bank of America? And geez, I didn't know, you guys did life insurance too. Well, I like you so much and the Coca-Cola was tasty. Yeah, let's do that as well. All right, so with regards to registered investment advisor and their IARs, what is their standard of care?
Speaker 2:What do they get held to in terms of responsibility to their clients, doing what's right for them and putting their interest first, just like the broker should be doing under suitability. We all know what doing what's right is about. I don't need to use terms like suitability or the one I'm going to use right now. Terms like suitability or the one I'm going to use right now, fiduciary, don't, don't don't. We love that term. Our industry does well. You know, I'm operating as a fiduciary, which means I am compelled nobody says I want to, but I am compelled to operate and make all of my judgments and decisions and transactions solely in the better interest of you, my client. See it says so right here in the contract.
Speaker 1:That is the correct answer. Isn't it interesting that fiduciary is now part of sales and marketing pitches from folks in the business? If you're not working with a fiduciary advisor, you should be. I'm a fiduciary advisor, and if you're not working with one, maybe you give us a call. I mean on and on and on. It's now a marketing term more than it is a technical term when it comes to legal responsibility to your clientele.
Speaker 2:I think it's watering down the higher order, the higher calling of people to get into the industry that really want to help people, because that's a character issue. Yeah, it is.
Speaker 1:It's story time as a reminder and I know we went through this but Bernie Madoff he owned a registered investment advisor. He was an investment advisor representative and yet we all know the story of Bernie Madoff embezzled billions from his clientele, so he was a fiduciary. So if you think about that, do all fiduciaries immediately have our trusts? I don't think so. Just because you're a fiduciary doesn't mean you're beyond reproach.
Speaker 2:Correct. There is a higher oversight and the bar is set quite high as opposed to suitability. That doesn't mean you're really working with a fiduciary, because I believe part of being a professional is a couple of components here. You have an esoteric body of knowledge, you have also a calling and you operate at a level of professionalism that inherent in that calling is I put my clients first and I don't have to wave a banner telling you that's what I do. Yeah, when I hear trust me, I'm a fiduciary, I scream jump, run the other way.
Speaker 1:You do that a lot, though I mean even when I say boo when you come out of the bathroom as soon as this podcast is over.
Speaker 2:Mark Robinson has left the room. I danger when this podcast is over. Mark Robinson has left the room.
Speaker 1:My danger will so help me a little bit more. The RIA and the Independent Advisor, rep IAR, who is basically making sure and setting the rules for the advisor, the investment advisor, investment advisor representative, when it comes to the business that they do, depending on the size of the assets.
Speaker 2:It could be the state and that's under $100 million Above. That is the Securities and Exchange Commission, sec.
Speaker 2:Right, so SEC is the godfather, so to speak, when it comes to looking out for consumers, practices, businesses for registered investment advisors yes, yes, and it has an illustrious career, even right back to its founding, of always setting aside politics, always setting aside special interest, to work solely on the management and flow of business to the better interests of the clients. And who better could they put in to first be the head of the SEC, but that whiskey runner, joseph Kennedy? You mean the first head of the SEC back? But that whiskey runner, joseph Kennedy.
Speaker 1:You mean the first head of the SEC? That's right. That's right. Back in 35, 36, whatever it was, yeah, yeah, and he was going to clean things up.
Speaker 2:Do you know why I bring that up? Because you're angry, Forgive me.
Speaker 1:Father, for I have sinned.
Speaker 2:Yeah, it's total bullshit on stilts, regulatory authorities, and there seems to be this moral vector that, because you work for FINRA or a state regulator or the SEC, that you are acting as a fiduciary and you have that calling of truly looking out for the better interest of the consumer, that hapless consumer that always gets the rubber chicken over the head.
Speaker 1:That's right. Well, we know, by virtue of Enron trading. It's the rubber chicken over the head. That's right. Well, we know, by virtue of Enron trading fiasco. Regulators are like any other job out there. Some of them do their job well, others don't, and when they don't, a lot of bad things happen. We can look at Bernie Madoff. A lot of bad things have happened because regulators didn't do the regulatory job that they're required to. And guess what? In the future there are going to be regulatory events that regulators didn't do their job in, and there's going to be more bad stuff that happens in the future.
Speaker 1:It's this continuous wheel of time and we rhyme. We might not exactly repeat, but damn, that stuff rhymes all the time. So we get back to this. How do we help you develop your bullshit sniffer? One part is upping your game and knowing a little bit more than what you know now, so that when you're involved with looking and working on your personal finances and having professionals in your life helping you, good on you, great job. Just remember Ronald Reagan's famous lines trust but verify, don't trust blindly. Have the mechanism to verify.
Speaker 2:Yeah, and trust has a rapid rate of obsolescence. By the way, it has to be constantly re-verified. Say that again, though that sounded great Trust has a rapid rate of obsolescence. Say it again.
Speaker 1:Are there certain types of professional designations that these financial professionals bring to the table that help you to determine whether they bring strong game knowledge, experience or not? What kind of designations might these sorts bring?
Speaker 2:Well, there's all sorts of designations and they became very popular in the 1990s and some of them were, you know, three-hour courses and you could have letters after your name. We are so desperate for that in our industry. We're just salespeople, most of us, and when we plumb the depths of our true selves we know I'm just a salesperson but I love to hold myself out as having special knowledge, as a witch doctor or high priest that only I have access to and you need to obey and follow. So we get crazy ass designations, most of which really aren't anything, that are meaningful, but then others are where there is certification or third party certification or are recognized by FINRA.
Speaker 1:Now in life insurance there's a thing called a chartered financial consultant. Yes, and that's sort of that, granddaddy. So is a certified life underwriter. Clu CLU right Big deals big designations in the insurance world, in the investment land. You have the CFP certified financial planner. You have the CFA certified financial analyst yes, which is also a big daddy. It takes about three years of straight study and test passing to get your level and that's primarily at the corporate level or at the institutional level.
Speaker 1:Having a cfa, they rarely are in practice small, small institutional and retail I usually in my past have run into cfAs outside of the large institutions in spinoffs where they've started their own organization. They're a trader, they're a hedge fund manager, they're something of that nature where they really need and desired a hugely brawn in terms of analytic knowledge, skill certification and so forth. And portfolio management and portfolio management. Yeah, so interesting. With regards to brokers, what certifications do?
Speaker 2:brokers. You know a straight old line broker really didn't need certification. They're savvy and insight was into the market, market directions, individual security analysis, technical analysis also and recommending stocks, bonds to buy and mutual funds Cool.
Speaker 1:So when the market comes at the consumer with insurance agent, investment broker, investment advisor, representative all of which sort of refer to themselves as advisor, is there a difference between registered investment advisor versus I'm a financial advisor?
Speaker 2:The industry made sure that it acknowledged the difference, but not in a way that the consumer could really apprehend the difference. Epic fail. So we had investment advisor. Remember, we talked about the Investment Advisor Act. That's spelled with an E.
Speaker 1:So the advisor that relates to the registered investment advisor, the fiduciary standard of care is spelled with an E.
Speaker 2:V-E-R.
Speaker 1:A-D-V-I-S-E-O-R. We could have done a Sesame Street thing right there. It would have been phenomenal. Anyway, go on. You've already ruined the moment.
Speaker 2:Well, we should really do a Count Dracula with you with all your numbers. Oh, I like that, you know, I like my calculator. All right, I digress, all right. So we've talked about the advisor with the E, so the industry came up with advisor with an O. Oh really, oh really, you're an advisor.
Speaker 1:I didn't see that coming.
Speaker 2:Interesting. So that's why we have financial advisors. Oh, I had no idea. That's why it's a non-legal term also.
Speaker 1:So if I see someone with a business card and the business card says I don't know financial advisor with an O on the business card, that's sort of a tell, isn't it? If I'm playing poker with the person, that's a little bit of a tell, isn't it? If I'm playing poker with the person, that's a little bit of a tell. Are they really working with a registered investment advisor or is it just a generic term they decided to put on their card to explain their role, their responsibility, their position in an organization.
Speaker 2:It's a generic term financial advisor. Instead of putting remember on the cards, it used to say registered representative.
Speaker 1:I mean, it still does, it still does, I does. I think you have options registered food allergies yeah, so long.
Speaker 2:Yeah, so you have the registered representative and then talking about your position in the company. Usually that is by investment of investment executive. Take two um, how did you? How did it happen? That's awful. So investment executive. Take two, that's all folks. So investment executive, vice president, senior vice president, which has nothing to do with their acumen, it's just that they are good producers, yep, and so they matriculate up through these terms Interesting.
Speaker 1:Yeah, interesting.
Speaker 2:We've talked about insurance agents, brokers, registered representatives, and we've talked about investment advisor representatives, IARs who charge a fee within the RIA. I'm talking to one of those that has the hat trick as you call it.
Speaker 1:They're licensed in all three.
Speaker 2:Yeah, what is inherent and problematic in dealing with someone, at least initially, with someone that has the hat trick, so to speak?
Speaker 1:Well, I think there's two sides of this coin If you're working with someone with a hat trick, and they are. This has three parts.
Speaker 2:So do you really want to use the two sides of the coin?
Speaker 1:Yeah, because we're talking about one that operates with character and one that operates without character. So I think, if you're working, with someone you didn't want.
Speaker 2:To have fun with me on that, I didn't want to.
Speaker 1:No, leave me alone. Stop touching me, Okay. So if you have the hat trick and you're working with someone with high character, we refer to them generally as a strong-handed advisor. They have insurance licenses, they're a broker, licensed as a broker, and they're also licensed to be an solutions to solve for your planning needs. Always, same company that has life insurance is an investment broker and an investment IAR, but doesn't necessarily operate with the strongest character. There you may, and most likely will, encounter someone that's acting on that conflict of interest, recommending solutions and products that may benefit them more than they benefit you, and they might not be looking out for your best interest, while all the while making sense to you, the consumer, as to why they're recommending X, B, Y and M as an example.
Speaker 2:You have yet to learn your alphabet in the sequence that was Cyrillic.
Speaker 1:Yeah, that was a Cyrillic alphabet. Yeah, so M's are H's and K's are K.
Speaker 2:And then there's some crazy stuff just isn't in the English alphabet Indeed, indeed. So, kelly, what are the takeaways from today? Wrap this up.
Speaker 1:So the who's, who and what do they do? Wrapping it up, the idea is to help you understand that there are, broadly speaking, three different professionals that you will customarily meet when you're working on financial planning, financial objectives and so forth. Each of these professionals, whether they're an insurance agent or investment broker or an investment advisor representative, are required and are monitored by different in some cases similar agencies, regulatory agencies out there, and that, depending on how they want to solve or recommend to solve for your planning needs. Every insurance agent out there typically has a bias to insurance to solve your problems, so there's always an insurance product to solve your problems.
Speaker 1:If you're a broker, well, every broker out there learns how to solve your problems with investments that pay commissions or spreads and markups markdowns, depending on what they're working with you on. If they're an investment advisor rep, they're earning fee income and they're held to the highest standard of stewardship, that being fiduciary, at least from the regulatory standpoint. So hopefully, if you work with professionals, if you interview professionals down the road, you can use some of this knowledge to start discerning what that professional truly is, what standards they're held to and how they're going to get paid if you end up working with them going forward. How was that?
Speaker 2:That's good.
Speaker 1:Pat me on the back buddy. Pat me on the back.
Speaker 2:Come on, scratch my ear, scratch my ear. You know I've been under the table here. I thought I was petting the dog, but it's your shin, it's a.