Learn About Financial Service Providers and Fees

Learn the costs of certain investments and where you can turn for guidance.

Financial Service Providers

These are just some of the different companies that provide access to financial or investment services. Before you open an account or do business with any of these companies, be sure to do your own research and make sure they are licensed and reputable.

• Commercial Banks
• Credit Unions
• Brokerage firms/houses
• Insurance companies
• Tax and accounting firms
• Credit card companies
• Payment processing companies
• Real estate companies
• Fintech companies

Brokerage Firms

A brokerage firm acts as an intermediary between a buyer and seller in the sale of stocks, bonds, and other options and securities. There are two types of brokerages:

• Full-service firms: They charge fees or commissions or both on sales. They may also offer various services like money management, estate planning, tax services, and more. These full-service firms are usually the traditional firms that have been around for decades.
• Discount brokerage firms: These are newer firms and are usually only available online. They may offer zero-fee trading services.

Financial Professionals

There are five main financial professionals: asset managers, financial advisors, financial coaches/consultants, investment advisors, and broker-dealers

• Asset managers manage their client’s portfolios and are authorized to invest on their behalf. They can either be Registered Investment Advisors, investment brokers, financial advisors, or robo-advisors. Robo-advisors usually use algorithms to manage ETFs. You can check to see if an advisor is licensed with the DFPI here.
• Financial advisors are registered professionals who guide and advise on investments, financial planning, and estate planning. They can also include tax professionals and insurance agents. Be sure to check if a financial advisor is licensed with the DFPI before using their services.
• Financial coaches/consultants usually provide guidance on specific areas or short-term goals. Financial coaches are not regulated and therefore can only provide general investment advice, not specific product recommendations.
• An investment advisor is any person who provides investment advice about securities. Investment advisors may also be employed to manage investment assets. Financial planners are usually investment advisors, too, and must be registered with the Securities and Exchange Commission (SEC) or licensed by the DFPI. You can check to see if an advisor is licensed with the DFPI here. 
• A broker-dealer is an individual or entity in the business of buying and selling securities for itself and others. When acting as a broker, a broker-dealer executes orders on behalf of their client. When acting as a dealer, they execute trades for their firm’s own account. Broker-dealers must be licensed by the DFPI and the Financial Industry Regulatory Authority (FINRA).

Fintech

Fintech companies are available online and include software, online banks, mobile apps, and more that allow you to access and manage your money digitally. You can also make digital financial transactions with them, such as sending money, trading stocks, or buying crypto assets.

Fees

Investment products and services have various fees. For example, you may pay an annual fee to work with an investment advisor or a fee/commission on stock trades if you work with a broker-dealer.

You may also incur fees for the purchase, maintenance, withdrawal from, or sale of various investments. Fees may also affect your investment portfolio, so be sure to understand how they work and what percentage fees are on your accounts.