Does YOUR Financial Advisor Have a Conflict of Interest Affecting Your Money? – The TRUTH Behind Revenue Sharing Disclosure

We’re going to talk about something today that may come as a shock to you. In fact, in the ten years I’ve spent advising people, not one person was aware of this common practice that occurs at all of the major investment companies. Are you ready?


It’s called revenue sharing.



Don’t take it from me either – if you currently work with a financial adviser, just take a look at your statement. The details are listed in black and white under “revenue sharing disclosure.” It’s totally legal, but by law they have to tell you about it.


By the way, I’m not trying to bash or embarrass anyone. I just believe you have a right to know about this. I have approval from a client to share part of their statement with you, so we’ll go right to the source and review the revenue sharing disclosure from their statement from “Company A” (we’ll use Company A in place of the name of the actual company).


It says this (emphasis added)–

“Company A receives payments know as revenue sharing from certain mutual fund companies, 529 plan program managers and insurance companies (collectively referred to as “product partners”). Virtually all of Company A’s transactions…involve product partners that pay revenue sharing to Company A. We want you to understand that Company A’s receipt of revenue sharing payments creates a potential conflict of interest in the form on an additional financial incentive and financial benefit to the firm, its financial advisors and equity owners in connection with the sale of products from these product partners.”


Wow. Let’s break this down into some more easily understandable terms.


Company A does business and with their “product partners” and recommends and sells their products to clients. In return, those product partners reward Company A with payments to boost their bottom line. And in the middle of it all, the disclosure clearly states that this system can create a conflict of interest due to those extra payments being received by Company A.


A conflict of interest meaning that Company A will likely not recommend what they believe to be best for you, the client – but rather a product that will promise a beneficial financial boost to them.


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To break it down even more – Company A is getting money from their partners to push products to you. Mutual funds, annuities, stocks, bonds, 529 college plans, insurance, etc.   


My question to you is this – if you have hard-earned money in your portfolio and you unknowingly participate in revenue sharing with a company that knows it’s a conflict of interest – how does that make you feel?


To me, it sounds like the company is not representing you. They’re representing the folks that are paying them “x” amount of money to sell their products.


As an independent firm, we made the decision not to participate in revenue sharing. We work for our clients, not product partners. We want to do what’s best for those who trust us with their assets without worrying about a conflict of interest.


Again, I want to emphasize that I am not trying to bash or embarrass anyone or any company. I simply want you to know about this practice called revenue sharing so you are aware of what might be affecting your hard-earned assets. Don’t take my word for it; pull out one of your statements and read it for yourself.


I hope this has been helpful to you and gives you a clearer picture on how to protect your portfolio and assets. If you want to learn more about other shocking financial industry secrets, you can click here for an upcoming webinar that will dive more into revenue sharing and two other topics.


If you’ve already attended the webinar and would like to apply for a free Financial GPS consultation, click here now.

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