Finding a broker or financial advisor you can trust may, at times, seem a daunting task.
That’s especially true when investors see sensational stories of brokers fleeing the police in an underwater getaway or faking their death in an airplane crash. Then there are the high-profile fraudsters such as Bernie Madoff, who masterminded the nation’s biggest investment fraud in history — a Ponzi scheme that cost tens of thousands of investors up to $65 billion.
And there are, of course, less sensational but still notable events. The Securities and Exchange Commission ចោទ a brokerage — Western International Securities Inc. — and five of its brokers on Thursday with violating a new rule that aims to raise investment-advice protections សម្រាប់អតិថិជន។
ច្រើនទៀតពីហិរញ្ញវត្ថុផ្ទាល់ខ្លួន:
36% នៃអ្នករកប្រាក់ចំណូលខ្ពស់កំពុងរស់នៅដោយប្រាក់ខែដល់ប្រាក់ខែ
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The brokers allegedly sold more than $13 million of high-risk, unrated bonds to retirees and others, despite the bonds being inappropriate for these investors due to their illiquidity and speculation, according to the SEC release. The brokerage didn’t respond to a request for comment.
It’s the first time the SEC has filed a lawsuit in connection with Regulation Best Interest, which the federal agency issued in 2019 and firms had to comply with by June 2020. Overall, the rule generally តម្រូវ brokers and firms to put a client’s interests ahead of their financial or other interests when making an investment recommendation. They must share some of the logic behind a recommendation and disclose conflicts of interest.
There were 690,000 registered brokers and financial advisors in 2021, នេះបើយោងតាម to the Financial Industry Regulatory Authority, or FINRA. Here are some tips for consumers to find one they can trust.
Heed red flags in regulator databases, online searches
There are some surefire warning signs that an advisor you’re considering may not be a good pick.
Financial regulators have online databases consumers can reference for background information on specific individuals and firms. The SEC has one, the ការលាតត្រដាងជាសាធារណៈរបស់ទីប្រឹក្សាវិនិយោគ website, for financial advisors. FINRA’s resource, ឈ្មួញកណ្តាលពិនិត្យ, lists brokers. (A person or firm may appear in both.)
First, check to see that the person appears in either system and that they are licensed or registered with a firm.
This means they have met a minimum level of credentials and background to work in the industry, according to Andrew Stoltmann, a Chicago-based attorney who represents consumers in fraud cases.
“If they’re not, that’s the uber-red flag,” Stoltmann previously told CNBC. “If not, it could be some guy cold-calling from his mom’s basement.”
Prospective clients should also Google the advisor or broker’s name to see if any news articles about past indiscretions or lawsuits appear. If so, it’s another bad sign. The regulatory databases will also list any disclosures, complaints, arbitrations or settlements involving the individual.
Experts recommend checking for nefarious financial behavior such as sales abuse practices, unsuitable recommendations, and excessive or unauthorized trading.
Review account statements for other warning signs
Customers can check their regular account statements for this information.
Further, losing money isn’t necessarily a red flag, especially if it occurs in a down market.
Ask questions about investment recommendations
Look for a fiduciary, fee-only advisor
They can search for such advisors in networks such as the National Association of Personal Financial Advisors, Garrett Planning Network, បណ្តាញផែនការ XY និង Alliance of Comprehensive Planners.
Such advisors must have a baseline competency such as the certified financial planner, or CFP, designation for financial planners and only receive flat fees for their hourly service, monthly subscriptions or fees based on the assets they manage for clients, Ron Rhoades, a CFP himself and director of the personal financial planning program at Western Kentucky University, told CNBC.
“This is the easiest way for a consumer to find somebody who is definitely on their side,” Rhoades said.
Consumers should interview at least three different advisors after conducting a search to ensure the right fit, he said.
Source: https://www.cnbc.com/2022/06/17/sec-issues-investor-protection-rule-charges-how-to-find-a-good-advisor.html