Category Archives: Full Transparency

What are the Two Ethical Standards for Financial Advisors?

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Based on Investor Watchdog research, people are very dependent on the ethics of financial planners, financial advisors, and money managers. They “hope” these professionals provide ethical advice that helps them achieve their financial goals. This “hope” has a major adversary. Wall Street firms want to minimize the ethical standards that apply to the legions of sales representatives (reps) that sell their products.

Investors have a tough time measuring advisors’ competence and trustworthiness because they do not have track records or mandatory disclosure requirements. Wall Street likes it this way. In fact, financial service firms spend millions of dollars per year on lobbyists who minimize industry standards for the ethical treatment of investors. Continue reading →

There are Three Types of Financial Advisors

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Due diligence is the process investors use to gather and evaluate financial advisor information before they sign a contract or invest assets.

Full disclosure is a financial advisor business practice that is based on the professionals’ willingness to provide complete, accurate information to investors. Based on these descriptions, there are three types of advisors.

High quality advisors practice full disclosure because they have nothing to hide. Your questions can cover Education, experience, certifications, compliance record, criminal record, conflicts of interest, and investment expenses.

Then there are advisors who practice partial disclosure. They volunteer information that makes them look good and they withhold information that makes them look bad. These advisors are dangerous because you don’t what information is being withheld and more importantly why it is being withheld.

The last group of advisors practice non-disclosure. They use personalities and sales skills to market investment and insurance products. They hope you do not ask them meaningful questions and if you do they use four deceptive sales tactics to avoid providing truthful responses: Omission, misrepresentation, exaggeration, and verbal responses so you have no documentation.

Full Transparency Scares Wall Street Executives

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What is full transparency when you buy investment advice, recommendations, and products?

Transparency occurs when investors are provided an easy-to-read document that contains all of the facts they need to make an informed decision when they select advisors and invest their assets.

Wall Street spends millions of lobbyist dollars per year fighting transparency. Corrupt politicians who are more interested in Wall Street money than serving the interests of the American public make sure regulations favor companies and not investors.

What is Wall Street afraid of? In a nutshell, companies are afraid investors would not buy what they are selling if they knew the truth. Transparency would damage revenues and profits of companies and the bonus compensation of the executives who run the companies. Wall Street’s solution is to keep investors in the dark.

So what are they hiding?

How about financial advisors who lack experience, education and certifications? Or, advisors who have numerous investor complaints on their compliance records?

How about financial advisors who use deceptive tactics in verbal sales pitches so investors have no written record of what was said to them.

How about investment products that that have excessive expenses and poor performance?

How about “beat the market” investment products that have never beaten the market?

In January, 2012, Investor Watchdog is going to begin providing free tools that investors can use to obtain the information they need to select and monitor quality advisors who are willing to practice full disclosure. Watchdog tools will also expose advisors who withhold important information from investors.

Watchdog tools have the potential to change the game in favor of investors.