Frequently Asked Questions

Fees

Industry Jargon

Regulatory Bodies

Conflicts of Interest

Trust Algorithm

Referencing investor.com & Profile Verification


Fees

What does fee-only advisor mean?

Fee-only advisors are paid solely by the client and do not accept any fees or compensation based on the product that they sell.

What are 12b1 Fees?

A 12b-1 fee is an annual marketing or distribution fee on a mutual fund that includes ongoing commissions that are paid to financial advisors for recommending the fund to clients.

How do Blended Rates work?

Advisors typically use a graduated fee structure that provides rate breakpoints as the value of the account increases. For instance, an advisor may charge 1.5% on the first $500,000 invested, 1.0% on the next $500,000, then 0.5% on anything above $1M. In this example, the blended rate for a $2M portfolio would be 0.875%. Each tier has a unique fee that's blended into the total fee charged.

Industry Jargon

What is AUM?

Assets Under Management (AUM) is the total value of assets being managed by a firm.

What is a custodian?

A financial institution that provides account administration, facilitates trading, and physically holds investor assets for the firm.

Regulatory Bodies

Who is the CFTC?

The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government responsible for regulating futures and option markets. This commission regulates derivatives, crude oil, foreign exchange rates, and digital or crypto currencies.

Who is the SEC?

The U.S. Securities and Exchange Commission (SEC) is an independent agency of the US government that enforces securities laws, protects investors, and regulates capital formation.

Who is FINRA?

The Financial Industry Regulatory Authority (FINRA) is a private corporation that is authorized by US Congress to enforce rules for the broker-dealer industry and protect investors.

What is an SRO?

A non-governmental organization that protects consumers by creating and enforcing industry regulations and standards that promote ethics and equality.

Conflicts of Interest

What is a Hybrid Advisor?

An investment advisor as well as a broker. While many hybrid advisors follow a fiduciary standard that requires them to act in the best interest of their clients, advisors that have broker ties are more likely to have conflicts of interest, meaning they do not always follow a fiduciary standard.

What is an Insurance Agent Conflict?

When a firm or their affiliate(s) actively engage in insurance sales, advisors may be incentivized to insure clients with products that generate high sales commissions when lower cost alternatives may exist.

What is an Attorney Conflict?

When a firm, or one of their affiliates, also practices as a law firm, advisors may be incentivized to implement plans as an attorney that would drive higher commissions for themselves as investment advisors.

What are Performance-Based Fees?

Also known as fulcrum fees, Performance-based fees utilize a compensation structure that pays an advisor an adjustable percentage of capital gains based on their performance relative to a benchmark.

What is Side-by-Side management?

When a firm manages accounts that have differing fee structures, investment advisors may be incentivized to favor clients that pay higher fees over others.

What are Soft-Dollar Benefits?

Soft dollars are benefits broadly defined as “research” that a broker provides to a financial advisor in exchange for commission-generating trades. These benefits, that include industry reports, expensive data services, and even conference tickets, could incentivize an advisor to push trades through broker-dealers that provide advantages to themselves and their firms instead of through a broker that could provide the best execution for their clients.

Trust Algorithm

Where does investor.com information and data come from?

The data and information we collect are completely objective and 100% unbiased. Our site is powered by publicly accessible regulatory filings provided to the Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) by each firm and individual.

How does the trust algorithm work?

We weight each data point collected from FINRA and the SEC individually based on its significance and net impact on Americans. The sorted and weighted variables are then processed through our proprietary trust algorithm to determine trustworthiness and produce a set of benefits and considerations.

Are all reported benefits and considerations tied to the trust algorithm?

All benefits and considerations factor into the algorithm in some capacity. We label each variable as either low, medium, or high impact and weight each benefit and consideration based on the corresponding significance level.

Can trust be changed by a firm or individual?

No. The trust algorithm is powered 100% by publicly accessible regulatory filings. If a firm wants to see data updated, they should re-file their ADV Part 1 and/or Part 2 disclosures with the SEC. If an individual wants to see their data updated, they should refile their SEC and/or FINRA information. The trust algorithm will then automatically recalculate once we receive and process the data.

Referencing investor.com & Profile Verification

Can I reference my investor.com Trusted badge for marketing?

Yes. As a consumer advocacy project, the investor.com Trusted badges are free to license and reference. We only request that you please refer to our brand guidelines and give us a heads up so we can ensure you have the correct badge and, more importantly, cross-promote your efforts. We appreciate the support!

What is the protocol for backlinking?

To ensure investor.com is properly cited, please refer to our brand guidelines.

If referencing investor.com is free, how does investor.com make money?

As a consumer advocacy project, we do not sell leads or banner advertising. Instead, we offer a profile verification program for advisory firms and individual advisors in which they may pay a modest annual fee of $999 or $185, respectively, to support the investor.com project.

What benefits are there to verifying my profile?

Alongside supporting the investor.com mission, each verified profile page unlocks the firm's logo (or individual's headshot), website URL, and contact phone number. Verified profiles also include a checkmark of support, are rotated through our homepage, and receive preferred exposure on our City Search tool covering nearly 30,000 cities across the United States. IMPORTANT: verifying a profile does NOT impact the trust algorithm.

How do I get a checkmark on my profile page?

The Verified Profile checkmark Verified Profile checkmark is used to identify that any firm or individual that has verified their profile in support of the investor.com consumer advocacy mission.

I am a financial professional or employee of an RIA, how do I verify my profile?

Please visit our plans page to learn more and start verifying your profile. The onboarding process takes less than three minutes to complete.