All three videos are brief and engaging - encourage you to take a few minutes total to watch all three.
Video 1 - "grain of salt" - a financial product salesperson at a bank having just provided "advice" (sold a product) hands the client a large grain of salt and admits what he is doing probably should be illegal. Very strong message! By interactive Brokers, a platform that RIA's might use in their business. (See further explanation below.)
Video 2 - a white board animation comparing the difference between a broker and RIA as the difference between a butcher and a dietician. Produced by an RIA firm. This has been around a few years - excellent.
Video 3 has been removed by the DOL since this blog was first posted. My guess because of industry lobbyist influence. It is quite clear and direct. It was an animated video. Essentially it said that someone selling mutual funds A and B - where A may be better for you, but where B pays more commission - the broker may be tempted to sell you Mutual Fund B. The subject matter is much more complex as you dig deeper, but this gets clearly and succinctly to the heart of the matter. Thank you Uncle Sam!!!!! It's nice that in addition to things like infrastructure, protection from foreign enemies, police/fire protection - that the government went to the trouble to produce this video to protect us.
Regarding the first video. This video alludes to a bank employee financial product salesman selling their own company's mutual fund or other products - that is the meaning of the term "proprietary product". (JP Morgan is a good example of this.) This is arguably the worst case of conflict of interest - he is receiving a commission but also selling his employer's product - a "double conflict of interest". I've heard an Edwards Jones salesperson proudly say the he does not do this. That's good that he does not commit the "double sin" - but he is selling products and receiving commissions all day which is nothing to be proud about. (Note since writing this Blog post, Edward Jones has added an RIA element to their firm operations, and now many advisors are dually registered - sometimes selling products getting commission and sometimes acting fee-only advisors. THe problem is you don’t know whcih hat they are wearing at the moment.)
It's important to say that these folks that live in this world of kickbacks and conflicts of interest - most are good people with good intentions. But it is a difficult environment and they should know better. It's also important to say that many RIA's are former brokers. Some have managed to fully disengage from the bad habits of their past, and some haven't. So being an RIA is not an automatic vote of confidence.
Be careful out there and ask a lot of questions. Force your investment advisor to show you to the penny what he/she receives, the mechanism of how they receive it and be crystal clear what you get for that cost. If they are a fiduciary and good at what they do, their communication on these topics will be clear and simple. If you ask these questions of brokers - they might not even be able to fully answer the questions which is scary.
Please don't give up and do it yourself - that may be the worst decision of all. The average investor's results are even less than the returns of the financial product salespersons earning commissions.