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THE LFA DIFFERENCE

The LFA Difference

When we first meet with a prospective client, one of the questions we are invariably asked is "How are you different than my broker at (insert name here)?"

Here are some key differences:

	Brokers (Registered Representatives)	Other Registered Investment Advisors	Lauterbach Financial Advisors
Standard of care:	Suitability Standard Model in which financial advice is considered "incidental" to the sales relationship that the providers of financial products (regardless if known as broker, registered representative, financial consultant, financial adviser or any other title that connotes investment advice-giving) have with their clients. Providers in this model are required to recommend only those products that are suitable for a particular client, based on his/her goals or circumstances. In this model, the broker is allowed to place his interests ahead of the investor and is not required to disclose conflicts of interests such as revenue sharing, commission payments or sales contests. For example, brokers can sell a product that costs more (and earns them a higher commission) than a comparable, lower cost (and lower commission) alternative, as long as the product meets the client’s needs. The broker is not required to disclose the existence of a lower-cost option or the higher commission that he would be paid on the transaction. What is this?	Fiduciary Standard Model in which investment advice is considered the core of the relationship with an investor. Advisors under this model are legally obligated to act in their clients' best interests. In this model, advisors are required to disclose any potential conflict of interest before making a recommendation to their clients. For example, if an advisor is considering between two comparable investment products, he is legally obligated to select the lower cost one for the client. What is this?
Works for:	Employer (Broker-Dealer)	The Client (You)
Main Source/Type of Income:	Commissions and/or "Fee-Based" _{(a combination of fees and commissions)}.	Fee Only or "Fee-Based"	Fee Only
Other Sources of Income:	Revenue sharing agreements for selling products from specific companies and sales contests, among others. Disclosure not required.	If any, they must be appropriately disclosed to the clients affected.
Believes Stock Picking Works:	Yes	Yes	No
Believes Market Timing Works:	Yes	Yes	No
Investment Strategy Based on:	What is "Hot" in the market (past performance), current sales contest, analyst recommendations, media reports.	What is "Hot" in the market (past performance), analyst recommendations, media reports.	Academic, proven, evidence-based research.