One of the things we hear most often from clients is about how the investor’s financial advisor was a Vice-President and they trusted him because he had this title or designation. Unfortunately, what investor’s never realize is that almost all financial advisors, regardless of experience, are “Vice-Presidents.” Brokerage firms anoint their brokers with this title to make them seem more important to clients then they may really be.
Although Rule of Conduct 2210 prohibits brokerage firms and brokers registered with FINRA from referencing nonexistent or self-conferred degrees or designations or referencing legitimate degrees or designations in a misleading manner, it does not preclude brokerage firms from giving their financial advisors a title that makes them seem important or trustworthy.
Investors should also be aware that Financial Analyst, Financial Adviser (Advisor), Financial Consultant, Financial Planner, Investment Consultant, stock broker or Wealth Manager are generic terms or job titles, and may be used by investment professionals who may not hold any specific designation.
The following are some helpful hints on information any investor should know before hiring an investment professional to insure that the financial advisor they hire is more than just a fancy title.
Here are some steps you can take to find an investment professional that can meet your financial needs:
– Think about your financial objectives and know what type of financial services you need. There is a wide variation in the range of products and services that investment professionals offer. Some professionals can provide financial statement preparation and analysis, investment planning, tax planning, estate planning, retirement planning, education planning, and risk management services. Other professionals may only be able to recommend a limited number of investment products. Knowing what you need will not only help you find the professional that’s right for you, but prevent you from paying for services you don’t want.
– Get names of professionals from friends, neighbors, family or business colleagues. If you receive a name of an investment professional from an individual or group that you don’t know, be certain to ask for several references.
– Talk with several professionals. Meet them face-to-face in their offices, if possible. Ask each of them about their:
• Areas of specialization
• Professional designations
• Registrations or licenses
• Work history
• Investment experience
• Products and services
• Disciplinary history
– Understand how you will pay them for their services. Investment professionals are typically paid in one (or more than one) of the following ways:
• An hourly fee
• A flat fee
• A commission on the investment products they sell you
• A percentage of the value of the assets they manage for you
• A combination of fees and commissions.
– Ask whether they receive any additional compensation or financial incentives based on the products they sell.. Sometimes investments professionals and their firms receive additional compensation for selling a particular mutual fund or other investment product..
– Make sure that the investment professionals and their firms are properly registered with FINRA, the U.S. Securities and Exchange Commission or a state insurance or securities regulator and learn about their professional background, business practices, and disciplinary history. Most investment professionals need to register as investment advisers, investment adviser representatives or brokers (registered representatives). Others may only be licensed to sell insurance. FINRA’s BrokerCheck can help you find registration and other background information on these professionals.
– Check out any professional designation by contacting the issuing organization and determining whether they are currently authorized to use the designation and whether they’ve been disciplined. And make sure you understand the requirements for a professional designation. The criteria used by organizations that grant professional designations for investment professionals vary greatly. As noted earlier, some require formal certification procedures including examinations and continuing professional education credits. Others may merely signify that membership dues have been paid.
– If the investment professional will sell you investment products, ask if the firm they work for is a member of the Securities Investor Protection Corporation (SIPC). SIPC provides limited customer protection if a firm becomes insolvent. Ask if the firm has other insurance that provides coverage beyond the SIPC limit. SIPC does not insure against losses attributable to a decline in the market value of your securities.
Remember, part of making the right investment decision is finding the investment professional that best meets your financial needs. Do not rush. Do your background investigation. Resist investment professionals that urge you to immediately hire them.
If you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
To learn more about The White Law Group, visit https://whitesecuritieslaw.com.Tags: broker fraud, Financial Advisor, FINRA, investment losses, investor protection, NASD, SEC, securities arbitration, Securities Attorney, Securities Lawyer Last modified: July 17, 2015