Market Outlook – What’s the difference between a portfolio manager and a broker?

Market Outlook – What’s the difference between a portfolio manager and a broker?

Many clients do not understand that investment advisors employed by the large bank-owned brokerage firms do not meet a fiduciary duty. This is because of the many conflicts of interest inherent in their business model. Advisors are legally required to call you prior to selling you an investment product. They present investment ideas, but ultimately you, the client, are making the decision. Their only responsibility is to suggest investments that are ‘suitable’—a very low threshold. Also, they are not required to disclose any fees or commissions that they or their employer will receive if you buy what they are recommending. Because this is how they are compensated, at a minimum it creates a potential bias toward products that generate higher fees and worst it can lead to conflicts of interest

It is a source of pride for us that we are discretionary investment managers, not brokers. We are independent of any bank or broker and our only source of revenue comes directly from our clients. We do not receive any kind of commissions or trailer fees. Sprung Investment Management is committed to meeting a fiduciary duty. A fiduciary duty (already the norm for doctors, lawyers and some other professionals) is a legal requirement that an adviser must put the client’s interests first. That includes avoiding all conflicts of interest and making the best recommendations for the client even if it means lower compensation for the adviser.

The Ontario Securities Commission is considering requiring brokers to meet a fiduciary duty. Read More >>

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