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A Story of Independence - The Fee Experts® and the Hybrid Model

Back in the early 1990s, fee business in the broker-dealer channel of the financial services industry was rare and largely ignored. To many in the industry, fee business was feared as a means of making the broker-dealer model obsolete. But Eric Schwartz, founder of Cambridge Investment Research, Inc. (Cambridge), embarked on a radical vision that led to an industry changing model. Cambridge created a hybrid model supporting freedom of choice and open architecture fee and commission platforms.

Fee business is based on a form of compensation paid by the client for services provided by their financial planner, and a broker-dealer is a company that processes the investment business of affiliated registered representatives (rep-advisors). In the United States, a broker-dealer has to be registered with the Financial Industry Regulatory Authority (FINRA) and is responsible for following securities laws. The broker-dealer must also ensure that affiliated rep-advisors are properly licensed, avoid conflicts of interest, demonstrate responsibility, and properly complete and maintain paperwork, as well as follow securities laws.

Just as you have the opportunity to choose your financial professional, we in turn can choose our independent broker-dealer. As independent financial professionals, we are not an employee of an investment or financial services firm – we are independent business owners. Therefore, we are not pressured or distracted by corporate interests and can focus on what is best for you and your financial goals. We are proud that our values are shared with our broker-dealer. Together, we focus on a common priority – you.

As one of the most respected and largest privately held independent broker-dealers in the U.S., Cambridge is owned entirely by its management and financial professionals. Cambridge, member FINRA/SIPC, has continually put the objectivity of independent financial professionals first to ensure the long-term success of the financial services industry, financial professionals, and clients. They remain strong and growing – with the goal of remaining privately owned.

Pioneering the Hybrid Model

Over the last two decades, the Cambridge approach to fee-based and commission business resolved a challenging business issue and transformed the broker-dealer industry. According to Schwartz, defining and following a new business model didn't begin easily. "Twenty years ago, our broker-dealer firm lost our two biggest offices - or about 75 percent of our revenue - because those offices decided to forgo all commissions and become fee-only. My first response was fear, anger, and a conclusion that the broker-dealer business was an obsolete model. But, a few years later, after really listening to financial planners who wanted to do more fee business, we designed the Cambridge way of making it easy to do both fee and commission business," said Schwartz. "Cambridge has achieved incredible results."

The Fee Experts®

Widely recognized across the industry as the pioneer of the hybrid approach, Cambridge has clearly earned its reputation as The Fee Experts®1. Today, many experts agree that fee business is an important approach to serving clients, and it may one day dominate the industry. The hybrid market has emerged as a major trend and leading independent broker-dealer firms are quick to announce their support of both platforms as more and more rep-advisors seek opportunities to serve their clients with fee and commission practices.

Fee-based business, the hybrid fee and commission business model, and the independent broker-dealer channel have gone from niche markets to a huge and rapidly growing segment of the financial services industry. Cambridge is positioned in the top-tier category of independent broker-dealer firms, for example, Cambridge ranks ninth in the FP 50 20122 survey of firms.

Unwavering Values of Commitment, Flexibility, Integrity, and Kindness

Although Cambridge's growth is impressive; the best part of the Cambridge story may be its longstanding culture and values. A firm's culture influences its reputation. Further, a firm's stated mission and values can be compared to how the firm's management and staff engage with advisors and manage business activity. Since its earliest days, the management and associates at Cambridge have been committed to a set of core values that shape everything the firm does - especially the quality of service delivered to financial professionals and their clients. In short, Cambridge is proud that advisors who share their values of commitment, flexibility, integrity, and kindness choose Cambridge. Together, we focus on a common priority: the client.

Fidelity Custody and Clearing Solutions 

We also employ the services of National Financial Services (NFS) and Pershing as our custodians.

This definition from investopedia means that these providers are responsible for safeguarding our clients funds and also providing them with statements.


Morningstar is used as a research tool to provide informed mutual fund and stock analysis.

Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, and investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Both are wholly-owned subsidiaries of Cambridge Investment Group, Inc.  Reproduced with permission by Cambridge Investment Research, Inc. for specific use through December 31, 2014, by KBT Wealth Solutions.