Use caution when selecting an investment advisor

It’s important to know that your investment advisor has your best interests at heart.  As Registered Investment Advisors (RIAs) we are “fiduciaries.”  That means that we put our clients’ interests first, ahead of our own.   One of the great things about being an independent RIA is that we work directly and only for our clients instead of being on the payroll of some large investment firm.  Our clients are our employers, not a large bank or some corporate giant with headquarters on Wall Street.

An article published in a recent issue of Financial Planning was entitled  Trusting Advisors Just got Harder.  

According to the author:

A new working paper by business school professors at the University of Chicago and University of Minnesota found that 7% of financial advisors have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission.

It’s a touchy subject in this industry.  Many of the issues are related to the sale of high-commission products including annuities and other insurance products.  According to the professors’ research, unfortunately, the offenders often move on to other firms and are likely to become repeat offenders.  Before working with an advisor it is always a good idea to do a BrokerCheck with FINRA (the Financial Industry Regulatory Agency) to see if he or she has a blemished record.

The study actually provides a list of the 10 advisory firms with the highest misconduct rates.  Surprisingly, some of the biggest firms in the industry have a large number of advisors with misconduct on their records.

Most of the people at these firms are honest and do look out for their clients’ best interest. But it does pay to be careful out there and at least do some background research, like BrokerCheck.  As Reagan once said “trust but verify.”

For more information, contact us.


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