Monday, October 13, 2014

NYTimes: Before the Advice, Check Out the Adviser

What say you @asppa Graff or DeGrassi?

Before the Advice, Check Out the Adviser


A few choice quotes:


"To make matters worse, many brokers call themselves “advisers,” a term that suggests consumers can unequivocally trust their counsel much as they might trust the family physician’s."

"Even if stronger protections are enacted, some advisers at financial firms may face potential conflicts of interest, depending on issues like sales goals or incentives that encourage them to push financial products that aren’t ideal for customers."

"IF consumers really want to put prospective advisers to the test, they could try a direct approach: Ask them to sign an oath stating they will act as fiduciaries, like the one recently created by the Committee for the Fiduciary Standard, an advocacy group. Andrew Stoltmann, a securities lawyer in Chicago, said such an oath would be binding in an arbitration proceeding, which is how a vast majority of customer disputes are settled.

“If the adviser refused to sign it, then the investor should run for the hills,” he said.
A fiduciary pledge doesn’t protect an investor from outright chicanery, however. Consider the case of the former Seattle investment adviser Mark Spangler, who was sentenced to 16 years in prison for defrauding customers and money laundering. He previously served as a chairman of the National Association of Personal Financial Advisors, a group whose advisers pledge to act as fiduciaries."

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