Five Factors

Broker Model

• Suitability
• Disclosure
• Transactions
• In-house custody
• Investment or Financial Advisor

Fiduciary vs Suitability

In a 2011 SEC report, it said consumers are often confused by the distinction between brokers and advisors. The report recommended a uniform standard of fiduciary care for the broker, dealer, and the investment adviser. Surprisingly, those lobbying against this are the large broker/dealers. This debate over suitability vs. fiduciary has drawn plenty of attention from both the broker/dealer world as well as the investment advisor community. The general consensus is that the fiduciary standard is the highest standard. Recently, congress required the Securities and Exchange Commission to consider how to impose fiduciary standards on all broker/dealers. We find it quite interesting that the broker/dealers are actually against the idea of becoming a fiduciary. One can only wonder why. At Plains Asset Management, we are very proud to be part of the fiduciary world, which comprises of a very small percentage of all advisors in the country.

Transparency vs. Disclosure

Brokers usually follow all the rules for legal disclosures, and you may know firsthand how it feels to squint at the small print, and then not understand what its saying because its written in highly formal hard-to-read industry language. Thats become the standard disclosure, but we dont think thats any way to treat your investments! At Plains Asset Management, we are committed to the higher standard of transparency. We will fully share details about any aspect of our service, including the ways in which we are compensated. We provide clients with fee reports showing complete transparency on the fees we charge. We do not accept any commissions or incentives from any investment product companies.

Advice Vs. Sales

Brokerage firms are usually investment product manufacturers who use their advisors (employees) as the prime distribution channel to sell their products, and because they are paid commissions, there is that looming pressure to produce sales. RIA s are paid an advisory fee, and have no incentive to sell any product or do trading in client accounts. Our only incentive is to grow your assets. Think of us simply as an investment consultant and concierge.

3rd party custody vs. In-house custody

At Plains Asset Management, we employ the use of third party custodians of your assets. Your account is never held in-house at Plains Asset Management. The account is opened in your name, and you are the owner. You have full authority to deposit and withdraw funds. Our power over the funds in the account is limited to buying and selling securities on your behalf, and having funds sent directly to you via your address of record. The large broker/dealer firms do not employ this practice. Typically, they have control over these assets under management and all the information regarding these assets, i.e. generation of all statements, audit information, and update materials. By the use of a third party custodian, clients are able to compare information provided by Plains Asset Management against statements provided by custodians, as a check-and-balance.

Registered Investment Advisor Vs. Investment/Financial Advisor

Large financial firms continue to blur the line between broker/dealer and investment advisor by creating and bundling new products. Many brokers have co-opted the title of financial advisor without accepting the fiduciary level of care as described in the Securities Act of 1940. With their deep pockets and million-dollar advertising campaigns, its no wonder most individuals are still confused by the different platforms. SIFMA (Securities Industry and Financial Markets Association) is very much in favor of establishing a new uniform fiduciary standard for both brokers and advisers SIFMA s general counsel said in an interview there are literally trillions of dollars of individual savings and investments were talking about here.

The fiduciary idea has taken somewhat of a back seat to the SEC rules thanks to the deep-pockets of Wall Street financial firms. The bullpen is full of Wall Street advisors waiting to get in front of you, so next time you hear a pitch, the single most important question to ask them is: Are you a fiduciary?