Having clients on both sides of the business model might allow you to act in some ways that are contrary to the clients’ best interest, conceded Chris Hamm, COO at Independent Financial Partners, a Tampa, Fla., hybrid RIA/brokerage firm that recently parted ways with LPL. But Hamm also said there are cases where variable or commission product like insurance or annuities makes sense for a client if you are truly doing what’s in their best interest.
The best reason for wanting an affiliation with a broker-dealer if you’re an RIA, Hamm said, is that “if a variable commission based product makes sense for a client, why would you not want the option to provide that for a client if you can, even as a fiduciary planner, instead of saying ‘I’m sorry I can’t give it to you.’ A commission-based relationship allows you to provide that.”