The investor.com Origin Story
Written by Blain Reinkensmeyer
My grandparents grew up during the Great Depression. "Work hard," "Live below your means," and "Save your money" were all mantras taught to them at a young age.
Both became teachers and dedicated their professional careers to educating the next generation of Americans. My grandma taught Latin and English, while my grandpa taught business.
Thanks to a focus on living below their means, they were able to save more money than they earned each year. By the time they reached their late 30s, they decided to hire a financial advisor to help them plan and save for retirement.
Conflicts of interest
Like millions of other Americans, they assumed a financial advisor was like a doctor or a lawyer. They believed that their financial advisor would put their best interests first.
What they didn't understand was that unlike doctors and lawyers, financial advisors can wear different regulatory hats. Depending on the hat, the obligation to my grandparents could be completely different.
In the case of my grandparents, they chose a dually-registered financial advisor, which meant the advisor practiced as both a fiduciary (like a doctor or lawyer) and as a broker (salesperson).
Brokers can be incentivized to recommend financial products that earn them a commission. As a broker, the law stated that as long as investments were "suitable" for the client at the time of sale, then they were legally OK.
Holiday bonuses... for the advisor
Unfortunately, their financial advisor charged high fees. Also, around the holidays each year, he would rotate portions of their portfolio into different loaded mutual funds (earning him a sales commission).
So, at the expense of their future retirement (which became a recurring tradition), their financial advisor gifted himself with a nice year-end bonus.
The catch? The transactions were all legal because even though the mutual funds weren't the lowest cost (some yielded sales commissions as high as 5%), they were still "suitable" at the time of the transaction.
Ultimately, my grandparents ended up spending well over $100,000 on excessive fees alone, working with a financial advisor they thought they could trust.
Americans lose $17 billion every year
The whole ordeal left me baffled.
Why aren't financial advisors legally obligated to always act like doctors and lawyers? Worse yet, if this happened to my grandparents, then that meant millions of other Americans were also unaware of the blatant conflicts of interest. The more I read, the more stories and factoids I uncovered.
The bottom line is that Americans lose billions of dollars to excessive fees and overly expensive financial products annually.
In fact, in 2015, the White House Council of Economic Advisers calculated the annual cost of conflicted investment advice to be about $17 billion each year.
Rating every financial advisory firm in the United States
That is why our mission at investor.com is to help everyday Americans research and compare financial advisors. That is why personal finance education is so important.
At investor.com, we've built a rating system that assesses every single financial advisory firm in the United States.
At investor.com, created as a consumer advocacy project, Americans are truly put first. We do not sell banner ads on the site, nor do we sell the personal information of Americans to the highest bidder.
We've also recruited some of the brightest and most passionate individuals who share our vision for one day living in a fiduciary-first America.
Closing thoughts
As teachers, my grandparents dedicated their professional careers to educating the next generation of Americans. At investor.com, our team is committed to helping current and future generations of Americans find a financial advisor they can trust.
And today, our mission has expanded, as we use this powerful platform to help consumers with even more aspects of their financial lives. In addition to searching for a highly rated financial advisor, you can use this site to find a great credit card or high-yield savings account — products that, too often, are hard to compare, vague on details or dressed up in glossy marketing-speak. And you can learn about a range of personal-finance topics, including how to save for retirement, how to invest, and more. All of our educational content is thoroughly researched and reported by a team of experts with whom I am humbled to work.
Please support the project by spreading the word. Let your friends and family know they can come to investor.com to research and compare financial advisors that will suit them best.
Thanks for reading,
Blain Reinkensmeyer
About the Editorial Team
Blain Reinkensmeyer has 20 years of trading experience with over 2,500 trades placed during that time. He heads research for all U.S.-based brokerages on StockBrokers.com and is respected by executives as the leading expert covering the online broker industry. Blain’s insights have been featured in the New York Times, Wall Street Journal, Forbes, and the Chicago Tribune, among other media outlets.