Headquartered in Fairfield, Iowa, Cambridge Investment Research Advisors, Inc. (CIRA) oversees nearly $44.33 billion in assets. It’s the investment advisor brother to broker-dealer Cambridge Investment Research, Inc., both of which are under parent company Cambridge Investment Group, Inc. Most advisor representatives are also registered representatives of its broker-dealer affiliate and many are insurance agents as well.
Cambridge Investment Research Advisors Background
Splintering its investment advisory business from its broker-dealer business in 2005, parent company Cambridge created CIRA in 2005. The Schwartz Family Trust is the majority owner of the parent company.
CIRA has offices across the country. Its advisor representatives are not actually employees. Instead, they are independent contractors.
Cambridge Investment Research Advisors Client Types and Account Minimums
CIRA’s account requirements vary, depending on the program. On the low end, its wrap fee WealthPort Program requires only $5,000, though higher minimums may apply for different strategies within the program. For other accounts, the minimum is typically $25,000. Though, again, particular advisor representatives may require more.
Given the relatively low minimums (and retirement accounts have no minimum), it’s no surprise that the great majority of clients (176,711, according to SEC data) do not have a high net worth. The company does work with affluent individuals (17,081 to be exact) - plus banking and thrift institutions, state and municipal government entities, pension and profit-sharing plans, trusts, estates, charitable organizations, corporations and other business entities.
Services Offered by Cambridge Investment Research Advisors
CIRA provides financial planning and consulting. It also offers investment management services, either on a discretionary or non-discretionary basis. It also sponsors and manages a wrap fee program for discretionary accounts. Additionally, CIRA advisor reps may recommend third-party money managers.
The firm’s corporate clients may hire advisor reps to provide financial wellness consulting to their employees. CIRA also offers retirement plan and consulting services.
Cambridge Investment Research Advisors Investing Philosophy
Advisor reps may have specializations and each one uses different strategies and methods of analysis. Generally, they are able to offer guidance on most kinds of investments, with the exception of futures and commodity contracts. Regarding outside money managers, CIRA requires that its advisor reps only recommend those approved by CIRA and its parent company.
Fees Under Cambridge Investment Research Advisors
Fees for financial planning and consulting can be on a fixed fee basis, in which case fees generally do not exceed $25,000 for individuals, or on an hourly basis of up to $500 per hour. Alternately, they can be based on a percentage of the assets that the advisor rep is helping you with. In some cases, the advisor rep may waive fees when you buy certain financial products.
For investment management services, CIRA offers seven platforms, which all carry different fees:
- Cambridge Investment Management Platform
- Investment Management through Institutional RIA Platform
- WealthPort Wrap
- CIRA Retirement Plan Strategies Management Platform
- Retirement Plan Advisory and Consulting Services
- Recommendation of unaffiliated third-party investment adviser
- Multi-manager platforms
The management fees can be a flat fee or on a tiered or breakpoint fee structure. When following a tiered schedule, the fee generally starts at 1.5% of client assets under management (AUM) for the first $100,000 and drops down to 1.0% for any funds more than $250,000. When following a breakpoint schedule, assets that amount to $100,000 would be charged 1.5%, while assets that amount to more than $250,000 would be charged 1.0% on the total amount. Accounts are also responsible for setup fees, ancillary fees, service fees and any underlying mutual fund or exchange-traded fund fees.
Within the firm’s wrap fee program, called WealthPort Wrap, there are three programs that carry different maximum advisory fees, ranging from 2.15% to 2.25% of AUM.
What to Watch Out For
As noted earlier, most advisor reps can also sell securities and many are licensed to sell insurance products. This can pose a conflict of interest when they are recommending products that they also earn commissions on, or generally if they profit from every securities transaction. This can be the case when a client first contracts an advisor rep to create only a financial plan, and then asks him or her to implement the plan. When offered investment recommendations, clients should ask why the rep is recommending them over other similar products and whether the rep will earn a commission.
CIRA reported 17 disciplinary or legal actions in its most recent filings with the Securities and Exchange Commission. Twelve involved affiliate individuals and two involved affiliate companies. Of the three actions involving CIRA itself, all were self-reported violations of regulations. Fines were $125,000 and $225,000, and in one case regarding a potential breach of fiduciary duty relating to mutual fund shares, CIRA agreed to pay a disgorgement of $5,645,106 and prejudgment interest of $542,456.
All information was accurate as of the writing of this article.
Tips for Finding the Right Financial Advisor
- Don’t want an advisor who will benefit from selling financial instruments to you? Then you need what’s called a fee-only advisor. To find one suited to your needs, use SmartAsset’s free, five-minute matching tool. After answering questions about yourself, you’ll be matched with up to three advisors vetted by us.
- Ask prospective advisors how much liability insurance they have. The right answer should cover how much you plan on putting in the advisor’s hands. So if they say $25,000 per incident and you have $50,000 to invest, that’s not enough coverage.