We act in our clients best interestPrint This Page
It doesn’t seem that a month goes by without another major wall street brand is in the headlines for questionable or even criminal practices. In 2010 Congress passed the “Dodd Frank Wall Street Reform and Consumer Protection Act.” An informed investor should ask themselves:
“What do I need to be protected from?”
It is estimated that between 2000 and 2010, Wall Street firms have paid the SEC over $26,000,000,000 in fines. These fines pale in comparison to the profits that were reaped and nearly all these fines were paid without an admission of wrongdoing. A settlement to the SEC seems as though it's just the common cost of doing business these days.
SO WHAT’S THE PROBLEM
“Brokers are typically paid through commissions, which can complicate the relationship. Also, brokerage firms may earn fees from investment companies for promoting their products, such as certain mutual funds.”Wall Street Journal, December 2010
The biggest problem is that 90% or more of the financial services industry operates on a “Suitability” standard. Brokers offers a range of products for sale that are carried by the company he or she represents and is paid commissions calculated as a percentage of the amount of money invested into the product. Only a small percentage of the industry operates with a “Fiduciary” standard, where one is paying for the best investment advice based on the needs of the client. A fiduciary advisor is usually paid a fee as a percentage of the total assets they manage for the client. As a fiduciary, one is legally obligated to do what’s in the client's best interest and disclose any conflicts of interest. You can see how the fiduciary standard would get in the way of some very profitable Wall Street endeavors....
CLICK HERE FOR MORE ON THE DETAILS BETWEEN “FIDUCIARY VS SUITABILITY”