You need to know there are real financial planners and there are bogus financial planners. The fake planners use the title to reduce sales resistance when they sell investment and insurance products. For example, a plan may recommend a substantial purchase of insurance products. You are more likely to buy if it is recommended by the plan and not by the financial planner. What is the difference? There is no difference when the plan represents the financial interests of the planner.
There are no industry regulations that limit who can call themselves financial planners. A brand new sales rep may adopt the title to facilitate the sales of financial products. There are no tests to make this claim more valid and there are no licenses for financial planners. If you are asking why, it is because Wall Street firms also benefit from this deceptive sales tactic. The firms make more money when they make it easy for their reps to sell investment products and services. And make no mistake. Wall Street has tremendous influence over the regulations that govern the industry. Continue reading →
Morgan Stanley CEO James Gorman had the partial fortitude to admit his firm belongs in the doghouse. Unfortunately, he also used two forms of standard Wall Street spin to dilute the impact of his comment when Bloomberg News quoted him saying, “Wall Street’s reputation will remain “in the doghouse” as long as trading scandals continue to plague the industry.” He went on to blame UBS for the latest scandal when he said, “The good works of the industry are ignored when some trader does some stupid thing like this guy at UBS did and goes to jail”.
Gorman is right about the doghouse. According to a Gallup poll last Summer, Americans’ confidence in U.S. banks fell to a record low of 21 percent; about half of what it was in 2007 before the Wall Street initiated crash in 2008. This was supported by Edelman Public Relations survey in January of this year that showed Financial Services & Banking were the least-trusted industries in America. Continue reading →
If your answer is yes, you may be in serious financial trouble and not know it. Read on if your answer is no. You are about to learn some nasty tricks of the trade that have been engineered by Wall Street.
A high percentage of investors believe financial advisors have to tell the truth because they work in a regulated industry. It’s true, they are supposed to tell the truth, but there is no way the regulatory agencies (FINRA, SEC, State Securities and Insurance Commissioners) can protect you from unscrupulous advisors. Continue reading →
Stockbrokers, who sell investment products for commissions, tell investors they are financial advisors because it reduces sales resistance and improves their odds of making sales. They are breaking an industry regulation when they call themselves advisors, but the claim is verbal in a sales pitch. Investors have no record of what was said to them so the sales reps get away with it.
It is easy to recognize stockbrokers and other types of sales reps. They have two distinguishing characteristics that are difficult to hide. You just have to know the right questions to ask. First, “What licenses and registrations do you hold?” And second, “How are you compensated for your advice and services?” The advisor is a sales rep if the answer to the first question is a Series 6 or 7 license and the answer to the second question is commissions. Continue reading →
Savvy investors do not buy investment products from sales representatives (reps). They select “real” financial advisors who have the specialized expertise and services they need to help them achieve their financial goals. This is a far cry from reps who want to sell mutual fund products that pay 5% commissions. Regardless of what reps say in their sales pitches, astute investors should know reps, who are paid at the time of the sale, have no economic incentive to help them achieve their financial goals.
If you are a savvy investor you should pay fees to a financial advisor for his knowledge, advice, and services. If you become dissatisfied with the advisor’s results you can terminate the relationship and the advisor’s compensation stops. This is a powerful incentive that motivates advisors to help you achieve your goals. Continue reading →
There are actually two questions in the heading of this blog post. Who are the financial advisors and what does it mean to be independent?
Just about everyone who sells financial advice, services, and products refers to themselves as advisors. However, from a licensing and registration point of view advisors have some very specific characteristics that distinguish them from other types of professionals.
A financial advisor is registered one of two ways. They may be Registered Investment Advisors (RIAs), which means they own their own firms. Or, they are Investment Advisor Representatives (IARs), which means they are registered with an RIA. This is a critical distinction because only RIAs and IARs are permitted to provide financial advice and ongoing services for fees. So if you believe, the way I do, that fees are the appropriate way to pay for financial advice, then you should select an RIA or an IAR. Continue reading →
Financial advisors are responsible for helping investors achieve their financial goals. They help them develop financial plans and investment strategy. They help them determine allocations to the various asset classes. They help them select money managers. And, they provide performance reports that document monthly or quarterly investment results.
What if advisors do not provide these services? There is a 95% probability the “advisor” is really a “sales representative” who is paid commissions to sell investment and insurance products. Their responsibilities stop when investors sign their contracts. The advisors’ next steps are collecting their commissions and moving on to the next sale. These advisors are clearly not accountable for results because they have already been paid and do not provide ongoing services. This is the number one reason why investors should not rely on sales reps to help them invest their assets – no accountability. Continue reading →
You have seen the TV advertisements. Wall Street markets competence, trust, and services that help you achieve your financial goals. You have also seen the headlines documenting Wall Street abuses that have cost investors hundreds of billions of dollars. Which one do you believe, the ads or the headlines?
Wall Street is trustworthy or its not. I believe the headlines because regulatory agencies (SEC, FINRA, states) have documented one Wall Street abuse after another. When the most prestigious firms on Wall Street (Goldman Sachs, Citigroup) are ripping off investors you know the industry is not the trustworthy source of advice and information that its advertisements say it is. Continue reading →
There is a one-page document that would stop Wall Street’s most deceptive sales practice in its tracks. Investors should ask for this document every time they select a new financial advisor. However, most investors don’t know what they don’t know. In this case they don’t know they can require the one-page document from advisors who want to control the investment of their assets.
What is Wall Street’s most deceptive sales practice? 75% of all so-called advisors are really sales representatives who are paid commissions to sell investment products. However, they are not required to disclose this fact to investors. They claim to be financial planners, financial consultants, and even financial advisors to camouflage their actual role of sales rep. Why hide this role? Investors do not want sales reps investing their assets. Consequently, there would be increased sales resistance if they knew the truth. Continue reading →
Wall Street does not want you to know there are two primary types of people who sell financial advice and services. One is a sales representative (rep) who is limited to selling investment products for commissions. The other is an advisor who provides financial advice and ongoing services for fees. Wall Street knows you do not want sales reps handling your assets, so it does everything it can to obscure the key differences between reps and advisors.
You can avoid many of Wall Street’s shadiest business practices if you select a professional who is a financial fiduciary. Following are five reasons why this is true. Continue reading →