November 28, 2006: The Securities and Exchange Commission recently adopted a rule requiring brokerage firms to prominently disclose important information to you. Know your rights!

Brokerage firms that offer fee-based money management services (not fee only) must prominently disclose the following information in brokerage account applications, sales materials and advertisements:

"Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations to disclose conflicts of interest and to act in your best interest. We are paid both by you, and sometimes, by people who pay us based upon what you buy. Therefore, our profits and our salespersons’ compensation may vary by product and over time.” What does this tell you? Watch out! If you’re working with an advisor, may sure you ask if this statement applies to him/her.

The alternative to the brokerage type of advice is to work with an Independent Registered Investment Advisor (RIA’s). These advisors are held to a higher standard when it comes to putting the investors’ interests first and doing the right thing for the client. Independent RIA’s have a “fiduciary responsibility” to act in the best interest of the client. Always ask if the person who is advising you is willing to accept “fiduciary responsibility” for the advice they are giving you and get it in writing.