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Is Cambridge Research a Scam? Is Cambridge Investment a Safe, Legitimate and Insured Brokerage Firm? Company's BBB Rating and Complaints (2021)



About Cambridge Investment Research


Cambridge Investment Research, Inc. (Cambridge) is an independent, privately-controlled broker-dealer with over $70 billion assets under management, nearly 700 home office associates, and over 2,900 independent registered representatives serving hundreds of thousands of clients across the United States. Cambridge offers broker-dealer services to individuals through this network of financial advisors.

Because these financial advisors are independent and not employed by traditional brokers such as Wells Fargo Advisors, Chase Private Client, or Morgan Stanley Wealth Management, Cambridge claims that their affiliated advisors won’t be obligated to push any particular brokerage firm’s investment agenda or in-house financial products or services. Advisors are free to utilize Cambridge’s services or their own.  

This gives an individual’s financial professional the freedom to offer objective guidance. Cambridge does not force them to sell proprietary products or meet any sales quotas. Therefore, financial professionals aren’t pressured or distracted by corporate interests and can focus on what is best for their clients’ financial goals.

Cambridge’s approach is to offer a hybrid combination of fee-only financial advice and services coupled with commission-based investment, all at the discretion of the financial advisor and determined by what is best for each client.


Is Cambridge Investment Research Safe and Legitimate?


Cambridge is legitimate in that it is a member of FINRA, the Financial Industry Regulatory Agency, the governing body of all securities dealers. This means that member dealers agree to abide by the rules of honest and ethical dealing with investors and agree to comply with fiduciary responsibility standards when advising clients on investments.

The company has been in business since 1992 but is privately owned and operated. This may be a slight safety concern because at least with publicly traded companies, financial disclosures are required to be given to shareholders on a regular basis and these companies are regulated by the Securities Exchange Commission (SEC). Cambridge does not fall under SEC jurisdiction because they do not hold clients’ money. The company uses Pershing LLC and National Financial Services LLC as clearing houses for general securities transactions and holding and administering funds in client accounts. Both of these companies are governed by the SEC.

Individual investors should also check if their independent advisor is registered or supervised by an industry regulator like the SEC or FINRA since Cambridge isn’t directly responsible for an individual advisor’s actions on behalf of his or her clients.


Cambridge Investment Account Review


Link to a detailed account review: Cambridge Investment Research review.


Is Cambridge Investment Research Insured?


Cambridge is a member of the Securities Investor Protection Corporation (SIPC) which insures investor accounts up to $500,000, with a maximum of $250,000 of that insurance in cash. SIPC insurance only guarantees investors will maintain their portfolio of investments and cash, but not the value of the original investments, in the event the company fails.

Cash that has been funneled into one of Cambridge’s sweep accounts offered by either Pershing or National Financial Services is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per account. However, individual advisors affiliated with Cambridge are not obliged to offer these programs or any other federally insured cash account. Once again, individuals should discuss this with any prospective independent advisor affiliated with Cambridge.


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Is Cambridge Investment Research a Scam?


Cambridge itself is not a scam in the sense of fraudulently separating investment dollars from unwitting clients. However, since they serve thousands of independent financial advisors, the real risk to investors being scammed out of their money lies with choosing an honest, ethical advisor who will not take advantage of a client by inappropriately recommending risky investments, churning accounts in order to generate larger commissions, or committing outright fraud. It is imperative that investors fully understand each investment product or service that is recommended by an advisor who is affiliated with Cambridge.


Cambridge Investment Research Better Business Bureau (BBB) Rating and Reviews


Since Cambridge does not directly conduct business with individual investors, the BBB has no ratings or reviews of the parent company. But three independent advisors who have affiliated with Cambridge are listed in the BBB files. Each received A+ ratings and had no customer complaints on record for the past three years.

This doesn’t mean all Cambridge-affiliated advisors have equally good reputations, especially since two of these three affiliates have only been associated with Cambridge for less than five years. Once again, investors must perform due diligence when selecting an independent financial advisor.


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Is Cambridge Investment Safe Conclusion


Cambridge Investment Research flies under the radar when compared to big name brokers even though it offers similar wealth management services to what the large Wall Street firms offer. Relatively small, and privately owned, the company is a legitimate broker-dealer despite differing from the in-house advisor model that publicly traded brokers utilize. Instead of carefully vetting the company and its proprietary offerings simultaneously with the quality of that company’s financial advisor, clients with Cambridge must separately vet the independent advisor as well as the products and services he or she offers through Cambridge. This process may take more time, but in all other respects requires investors to perform complete due diligence before trusting their money to anyone.