Advisory Account Definition | Annuity Digest (page 2)

Advisory Account

An advisory account is an account through which an Independent Registered Investment Advisor (RIA) provides investment advice to their clients. It is important to understand that an advisory account is very different from a brokerage account. With advisory accounts, an RIA has a fiduciary obligation (they are legally obligated) to act in the best interests of their clients at all times. RIAs must provide clients with a Form ADV which describes how they do business, reveals any potential conflicts of interest, and clearly describes how they are compensated. Advisory account compensation is typically through a fee that is disclosed in advance. Any other forms of compensation such as commissions must be disclosed, acknowledged and agreed to in advance by the client. Also see the glossary definition for brokerage account.

Financial Advisor Views on Annuities Appear Tightly Related to Business Models

A recent study from Cerulli Associates indicates that registered investment advisors (RIA) are more than hesitant to recommend annuities to their clients.

The report surveys and compares the views of various forms of financial advisors. Not surprisingly, financial advisors’ product views are tightly related to the financial incentives that support their business models. Consider, for example, the following: