I have been hearing a lot of ads recently from real estate brokers who “specialize” in short sales. “Are you underwater in your house? Contact us today. We are the upside down experts!”

The funny thing is, these same brokers were advertising how they could get you into a new, larger home, with little up-front payment just a few years ago. Then, they were the “no money down!” experts. Today, they are the “upside down”specialists. What gives?

Imagine if a money manager had the following advertisement: “Did you overpay for your stocks? Are you losing money? Contact us today! We are the experts in helping you sell your bad investment choices at a loss. You’ll be glad you called!” The fact is, I have never heard such a commercial, and here is why... A broker’s job is to facilitate a transaction. In exchange for doing so, he receives a commission.

It does not matter whether the purchase was a good one for you, whether you got a fair deal, or otherwise. The broker gets paid for executing the transaction. So they are perfectly happy assisting you in selling today – for a big loss – what they helped you buy a few years earlier. Compare this to an investment advisor who is a fiduciary.

A professional financial advisor must, by regulatory law, give you advise that is in your best interest. Not just what is suitable for you, which is the standard for a broker in the investment world. The difference seems subtle but can make a world of difference. Is it coincidental that major brokerage firms put their clients in their own products?

With thousands of mutual funds out there, it is pure chance that big financial firm X packs its clients with its own products? Not a chance. They often have a financial incentive to do so (being paid larger sales commissions as brokers for proprietary products), and remember, as long as the product is suitable they have met their standard…even if some other product is better for you.

When working with any professional, make sure you know how they butter their bread. Ask them how they are compensated. Determine where their interests rest. If they are not aligned with yours, think twice before you conduct business with them.

A broker is typically paid for completing a given transaction, whether said purchase/sale is in your interest or not. A financial advisor, however, must meet a higher standard, and always have his clients’interests at the top of the list.

This is very important when your hard earned money is on the line. Get well informed, lest you end up all wet.

(The information in this article is strictly for educational and illustrative purposes and is not an attempt to furnish personalized investment advice or services.)