Series 65: The beginning of something bigger?Article added by Robert Pujia on May 8, 2014
Robert Pujia

Robert Pujia

Coppell, TX

Joined: November 02, 2012

​From time to time, there is discussion in the industry about getting your Series 65 license and either starting your own registered investment advisory firm or joining one as an investment advisor representative. And hey, I'm all for getting it if you feel it will help your clients and yourself. Now you are acting as a fiduciary" (such a vaunted word these days).

In this industry, it essentially means investment advisors are required by law to act in their clients’ best interest. But in reality, what does that mean for the client, and do they really understand the difference between investment advisors and brokers?

Sure, saying you "are required by law to act in their best interest" sounds good, but in general, does licensure equal qualification? I think not, and I doubt the clients think that either. And frankly, passing the Series 65 and calling yourself a fiduciary shows you can pass an exam.

So where does the client go for the assurance of quality the he or she will work with an advisor who is truly qualified? The answer is from understanding the incentive the advisor has to provide quality advice to the client. And trust must be built with the advisor ahead of time before the client can understand this. For the advisor to stay in business for the long term, they must act in their best interest.

But as an advisor, if you are going to go down this path, be sure to understand that getting the Series 65 is really just the beginning of something that could be bigger. It doesn't mean you are automatically qualified, and in many cases, far from it.

I believe licensure is nothing more than a way for regulatory authorities to make money and wield power. You must take it upon yourself to learn and become educated. If you are going to partner with an RIA, yes, it is important they provide the proper education, training, and tools to grow your business (don't partner with one if they don't). But at the end of the day, like an athlete, you have to do the work off the field, away from everyone else.

Investing clients' money in stocks, bonds, or something else with market risk is not something to be taken lightly and clearly a volatile thing. But volatility, in my view, is a good thing, because that is what allows for potentially strong long-term returns. Know how to embrace it, but know that it may not be for all clients, and understand the impact it can have on their financial picture before you advise putting a portion of their assets in something with market risk.
Also understand returns are just a small part of a client's financial picture. There's also liquidity, cash flow, income, insurance and many other factors. Understand that returns are not an end-all-be-all for picking managers. Understand it is important to be flexible in your platform so that when various situations arise for the client, you can truly be a fiduciary and provide the right kind of solutions.

Have I scared you off from getting the 65? I hope not, because advisors who I see get it and embrace it are finding a great deal of satisfaction, both personally and professionally. If you are someone who is on the fence about getting it, ask yourself, what are you going to do with it once you have it? Is just for protection or so you can call yourself a "fiduciary," or is it the beginning of something bigger? I hope it's the beginning of something bigger.
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