3rd Party Custodianship

If you understand the source of Wall Street's profits, you will know that they make significant money by using your assets as collateral for their own proprietary trading. This is, of course, in addition to the fees they charge you.

One step in the right direction is to have a 3rd party custody your funds. For example, if you hire a Registered Investment Advisor, you are paying him/her for their advice. The funds would be held at 3rd party custodian such as Fidelity (a family owned business that never required a bailout). The advisor would have the ability to manage your account but never withdraw or move the funds. At any point, you can “fire” the advisor and no longer permit them to manage the funds but the funds can remain at the custodian. The statements would be generated and sent directly to you by the custodian (i.e. Fidelity) so you know you are getting accurate and timely account values. In short, this arrangement keeps you in control and removes the conflicts.

"After all, brokers are ultimately sales people who are generally compensated by commission and who’s primary loyalty is to their employers.”

Kiplingers Personal Finance, December 2010