steps-ledIt is essential to understand that the securities industry is very experienced at protecting it’s member firms and registered representatives  So who is protecting the individual investor?  The unfortunate answer is NO ONE. That is why it is so important to become an educated investor!  Investor Protector would like to offer steps to follow to protect your hard earned assets and Level The Playing Field.

  1. Please understand that all documents broker/ advisors have investors sign are designed to protect the brokerage firm, their registered representatives and the National Association of securities dealers. (F.I.N.R.A.)  THE ONLY WAY TO PROTECT YOURSELF and comply with state law is to make known that you plan to AUDIO TAPE and DOCUMENT all conversations in person or by phone.
  2. Be aware at all times that despite the fancy title on the broker/ advisor’s business card, these people are first and foremost trained sales people.
  3. Ask your chosen broker / advisor to sign a Fiduciary Duty Oath. If there is any objection, that should be a very important Red Flag to you.
  4. Make your chosen broker/ advisor put in writing all investment suggestions, including Pros and Cons of the investment and risk tolerence associated with the investment suggestion.
  5. Be skeptical of any broker/ advisor who claims to be an EXPERT in the investment industry.  Always ask and receive in writing all of their tested credentials which allows them to claim an EXPERT STATUS and allows them to suggest certain investments. Always review their licensing history using  F.I.N.R.A. broker check.
  6. Always ask and receive in writing the COMPLAINTS, if any, that your broker/ advisor has ever received. If he or she claims they have had no complaints make them put that in writing.
  7. When committing funds to a brokerage firm make sure you meet as many people at the firm as possible. With the advent of cameras in cellphones, ask to TAKE PICTURES OF THE COLLEAGUES IN THE FIRM and put their name and title on each picture. Save these pictures in your personal records.
  8. Ask your broker/ advisor for the names and contact info of other clients. Always CHECK REFERENCES and compare investment recommendations periodically with these references. Again save this information in your personal records.
  9. Always ask and receive in writing what a recommended INVESTMENT WILL COST. An honorable broker/ advisor should tell you IMMEDIATELY. Understand that many investments have hidden commissions ( trailing fees, backend load fees, hidden annuity commissions to salespeople) These fees must be disclosed if asked about.
  10.  Get to know the manager of your brokerage firm and speak to him or her when you visit the firm. Having the manager of the firm as your broker/ advisor can be a problem. You must make sure there is a good system of checks and balances.
  11. Aside from audio taping all conversations, make written notes of all meetings and conversations and have your advisor sign off on them. Please understand that each broker/ advisor is trained to document your meetings and conversations to protect themselves and their firm. You must do the same because if you discover a problem with your broker/ advisor you can be guaranteed that his or her’s notes will not be in your best interest.
  12. Most of the brokerage firms today are satellite offices of very large publicly traded firms. Make a point to receive the contact information for the Corporate Head of Sales. Contact this person and make clear your investment goals and objectives. Also follow up your conversation with a return receipt e-mail again restating your goals, objectives and risk tolerences associated with your account.
  13. Understand that most of these brokerage firms are nothing more than large sales organizations, training their broker/ advisors to do nothing more than promote investments and investment strategies to improve their bottom line.
  14. Also understand that there are even brokerage firms that have sales incentive programs where the firm’s brokers/ advisors can earn bonuses or trips for marketing certain products or reaching certain sales goals. Again, good for the firm’s bottom line, but may not be good for yours.
  15.  Many investments and investment strategies carry extremely high commission rates. Always be aware of your costs and don’t be talked into a fee based account unless it can be documented in writing that it is a benefit to you more than the brokerage firm.
  16. If you have a complaint concerning your broker/ advisor make sure it is done in quadruplicate in writing or by e-mail ( always return receipt) 1. Copy to your broker/ advisor 2. Copy to the branch manager  3. Copy to the head of sales at the main corporate office  4. Copy to Investor Protector.
  17. You must understand that broker/ advisors are specially trained on how to deal with complaints. If your broker/ advisor tells you to please not make a written complaint or that you can work out your problems privately DO NOT AGREE.  YOU MUST HAVE DOCUMENTATION TO PROTECT YOURSELF.
  18. You must make and keep copies of all correspondences and complaints for your personal records. Always understand that your Broker/ Advisor, the Branch Manager and the Corporate Head of Sales are all colleagues and they will do what ever it takes to protect their firm. That is why it is important to also send a copy of your complaints to Investor Protector.
  19. When opening a brokerage account with a firm you must be very careful and understand all fine print on these forms. Do not agree in any way to allow a firm member or assistant to fill out any of your account forms. Make sure ALL FORMS ARE FILLED OUT IN YOUR OWN HANDWRITING in the presence of your advisor and if possible the branch manager.
  20. Once you complete your account forms and sign them, immediately get a copy of all forms. Always inspect your copy to make sure no alterations were made. Also receive in writing that you have received only a copy of the paperwork and THE BROKERAGE FIRM POSSESSES ALL ORIGINAL DOCUMENTS.
  21. Make it known for the record and in writing that you will not recognize or accept any letters from your advisor by mail unless they are sent signed receipt, so both parties have proof of the correspondence. If a letter is sent to you via e-mail always print the letter for your personal records and always respond to all correspondences immediately, making a copy of your response and sending it return receipt.
  22. Every investor must keep a detailed file of all account forms, written correspondences, audio tapes and monthly statements. It is essential to understand how sophisticated the investment firms have become at training their representatives about what to say and not to say to persuade you toward certain investments. Omission of information in the sale of a financial product or strategy is just as fraudulent as a complete misrepresentation. THE ONLY WAY TO PROVE FRAUDULENT SALES PRACTICES IS BY AUDIO TAPING.
  23. There is no mistake that many of the brokerage firms’ monthly statements are extremely difficult to understand and do not include commissions paid. This is why it is imperative that all questions and responses with your broker/ advisor be in writing or audio taped.
  24. It is extremely important to read and understand all small print disclosures on trade confirmation tickets. Always check to see if the trade is designated as solicited or non-solicited. A solicited order represents an order that is suggested and entered by your broker/ advisor. Always make sure that all fine print disclosures and commission paid match precisely to how your representative described it.
  25. All investors must understand that commissions to be paid are always negotiable and should be completely disclosed before your broker/ advisor enters any order.
  26. Make sure that when you receive your first account monthly statement you understand and can easily read that statement. If you have questions about your statement you should immediately notify your broker/ advisor, branch manager or head of corporate sales in writing and also make sure that your stated goals and risk tolerances are recorded accurately.
  27. As stated earlier, it is standard practice for a broker/ advisor to make notes of all their meetings and phone conversations. As an educated investor you must demand that you have access to those notes and have the ability to read, sign off and receive a copy of each entry as soon as transcribed.
  28. As the business atmosphere becomes more competitive each year, many firms focus on senior citizens or people who have been out of the work place for a long time. Please understand that this focus is no mistake. Business ethics is at a low point, so all investors must work as hard at holding on to their hard earned assets as they did acquiring them. To so many companies sales and volume are the only things that matter, as investors we have to join together to protect each other from these firms.
  29. Many broker/ advisors rely on the fact that most people are very private when it comes to talking about their finances. It is for this reason that investors can be so easily exploited. Since most investor – advisor relationships are based upon a recommendation or gut feeling about character it is often difficult to know whether your broker/ advisor will do the right thing for you and your family. If your current or prospective advisor will not allow you to audio tape your conversations and document the advice given, that should be an important signal to you and your family.