Advisory vs Brokerage Relationships
Brokerage and investment advisory relationships: understanding the differences
Raymond James Financial, Inc. and its subsidiaries, including Raymond James & Associates, Inc., Raymond James Financial Services, Inc., and Raymond James Financial Services Advisors, Inc. (“Raymond James”) form a diversified financial services company, providing services throughout the United States, Canada, and overseas. We are registered with the U.S. Securities and Exchange Commission as a broker-dealer and an investment adviser, offering both brokerage and investment advisory services to our clients.
Working with their financial advisors, our clients determine the services that are appropriate for them in light of their financial goals and investment objectives. Depending on the services you request, we serve in our capacity as a broker-dealer, investment adviser, or both. It is important that you understand the differences between brokerage services and investment advisory services when deciding which relationship or combination of relationships fit your investment needs.
This disclosure highlights important distinctions between brokerage and investment advisory accounts, including applicable laws and our obligations and responsibilities in servicing such accounts. These obligations and responsibilities are more fully described in our applicable agreements with you. You should review this disclosure thoroughly and discuss it with your financial advisor.
Brokerage Accounts and Services
In our capacity as a broker-dealer and in connection with your brokerage account, we may provide a number of services related to investments in securities, including (but not limited to): taking customer orders and executing securities transactions; custody, investment research; and providing general information regarding financial products. We may also provide recommendations concerning whether to buy, sell, or hold securities. We do not charge a separate fee for such recommendations because we consider them to be part of our brokerage services. However, you pay us commissions and other applicable fees each time we execute a transaction in your brokerage account. At times, we are also paid by third parties in connection with your investment decisions.
In our capacity as a broker-dealer, we do not make investment decisions for you or manage your accounts on a discretionary basis. This means that we will buy or sell securities only when you direct us to do so.
When we act in our capacity as a broker, we are subject to the Securities Exchange Act of 1934, the Securities Act of 1933, the rules of self-regulatory organizations, such as the Financial Industry Regulatory Authority, and applicable state laws. Applicable rules and regulations generally require that:
- We have a reasonable basis for believing that any securities recommendations we make to you are suitable for you, in light of what we know about your individual financial circumstances, needs and goals.
- We deal fairly with you, meaning that the prices you receive when we execute transactions for you must be reasonable and fair in light of prevailing market conditions and that the commissions and other fees we charge you must not be excessive.
Our legal obligations as a broker-dealer to disclose detailed information to you about the nature and scope of our business, personnel, fees, conflicts between our interests and your interests and other matters are more limited than when we act in our capacity as an investment adviser. Investment advisory relationships are discussed in further detail below.
Investment Advisory Accounts and Services
As an investment adviser, we offer a variety of investment advisory services and programs, including: investment education and/or advice, individual and institutional discretionary and nondiscretionary investment advisory programs, retirement plan consulting and management; advice on the selection of investment managers or securities offered through our investment advisory programs, and a broad array of financial planning services.
When we act in our capacity as an investment adviser, we will generally do so pursuant to a written agreement with you that sets forth the investment advisory relationship and our obligations to you. At the outset of our investment advisory relationship with you, you will also receive disclosure documents that describe our investment advisory services and include important information about, among other things, our fees, personnel, other business activities and conflicts between our interests and your interests.
When we act as an investment adviser to you, we are generally considered to have a fiduciary relationship with you under the Investment Advisers Act of 1940 and applicable state laws. Applicable rules and regulations generally require that:
- We act in what we reasonably believe to be your best interests based on your stated financial situation and investment objectives.
- We disclose or avoid material conflicts of interest.
- We treat you and our other investment advisory clients fairly and equitably, without unfairly favoring one client to the disadvantage of another.
- Any investment decisions or recommendations that we make to you be: suitable and appropriate for you; consistent with your stated investment objectives and goals; consistent with any restrictions that you have communicated to us.
Unlike a brokerage account, the fees applicable to an investment advisory account are generally based on the total value of assets in the account and are payable quarterly. In certain investment advisory programs, processing fees for execution services on a transaction basis may also apply.
What Happens When We Act as Both a Broker-Dealer and an Investment Adviser
There are times when we may act as a broker-dealer and an investment advisor, concurrently. For instance, you may maintain a brokerage account and an investment advisory account with Raymond James, at the same time. The rules applicable to each individual account type apply with respect to that account. For example, we will not make investment decisions for you or manage your brokerage account(s); however, we will manage your investment advisory account(s), as agreed upon in the applicable investment advisory agreement.
For More Information
We hope that the information above will help you in determining what type of account and what level of service is appropriate for you. For more information regarding the services provided by Raymond James, our fees and compensation, or to view our other disclosures, please visit: