The Wall Street Journal reports that customers are moving towards independent registered investment advisors (RIA) and away from Wall Street brokerage firms.
RIAs brought in $108 billion in new assets in 2008 while brokerage firms lost $8 billion.
The change is seen in large part as a migration towards more objective financial advice.
A registered investment advisor acts as a fiduciary, offers an advisory account, and is free of many of the potential conflicts of interest that are inherent in a brokerage account.
Brokers do not act as fiduciaries and their investment recommendations are held to much lower standards which involve suitability rather than fiduciary liability.
The Journal article does an excellent job of laying-out the options and considerations involved in the process of selecting a financial advisor.
The decision can be complex, and much of the information that is available is confusing at best but often misleading.
Source: Wall Street Journal (subscription required)
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