If it sounds too good to be true…it probably is!

FINRA
FINRA (Financial Industry Regulatory Authority) is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly[1]. FINRA’s BrokerCheck provides access to information about brokers and brokerage firms, such as whether a person or firm is registered, as required by law, to sell securities, offer investment advice, or both. It also provides a broker’s employment history, licensing information and regulatory actions, arbitrations and complaints. It should be the first place you go to find out more about any financial adviser that you are considering.Protect Yourself
A reputable financial adviser will ask you to provide a significant amount of information about your life, your goals, your investment strategy, and more; and will want to spend time with you to get to know you. This time and effort is extremely valuable to ensure your best interests are a top priority when designing your investment plan. If your financial adviser is not taking this time with you or is not requiring this important information, they are not the right adviser for you.Once you find the right financial adviser, remain engaged and perform the following:
- Obtain copies of all opening account documentation and verify that your investment goals and objectives are stated correctly. Do NOT sign anything that is not completely filled out.
- Know how your financial adviser is being compensated. Be wary of high commission products.
- Open and review all correspondence and account statements when you receive them. Verify these account statements with information that you can obtain online.
- Evaluate your adviser’s recommendations by doing your own independent research. Contact us for our list of Investments You May Want to Avoid!
- Only write checks/receive money to/from your registered brokerage firm.
- Meet regularly with your financial adviser and review all of your investments, your investment plan and goals, and any changes to your financial situation.
- Always investigate when your broker leaves his or her firm. Contact the brokerage firm directly.
True Victims
One investigation I performed resulted from a couple concerned that their investment dollars had dropped significantly over the last few years and were uneasy with their investment adviser’s responses to their inquiries. They had been with the same broker for several years and had signed on with him because one of their friends used him and was very happy with the services. My clients had regularly met with the broker; however, they were unable to get any satisfactory answers to their questions, they continued to lose money, and the statements they received were confusing and only produced when requested. My first stop was to FINRA’s BrokerCheck site, where I discovered that the broker had several disciplinary actions on his record. An investigation into their investment portfolio and transactions revealed they were heavily invested in high-risk investments (with very high initial fees) that were losing money; yet, my clients assured me that they had told the broker they wanted only low-risk investments. Ultimately, my clients hired an attorney to file a lawsuit against the broker and the broker dealer and I provided them with a damages assessment for their claim. The case was settled out of court and while my clients received a monetary settlement, the amount was much less than what they had lost. Like many of us, my clients needed help navigating the complex world of investing and trusted that this broker had their best interests in mind when he made decisions about their investments. Sadly, they realized mistakes they made:- They did not research the broker and his record
- They did not obtain their initial account opening documentation and therefore did not know that their risk tolerance had been classified as High, instead of Low
- They did not thoroughly question his recommendations and did not research them, independently
- They received statements when they asked for them; but the statements were on odd dates and did not provide even the basic cost information to calculate gains or losses on their investments
- They met regularly with the broker, but did not ever feel their questions were answered satisfactorily
PFC Can Help
We all want to achieve financial security and want to trust those that we have engage to oversee our financial investments. We don’t want to be scammed or defrauded and lose our hard-earned money. Most of us know that if something is too good to be true, it likely is. However, there are financial advisers out there that you want to avoid. If you are concerned about your investments in your portfolio or your financial adviser, and want an independent review of your situation, contact PFC for a free consultation or call (281) 668-9168.“Start with a comprehensive financial plan from an advisor in a fiduciary role. Investing is a complex topic so be aware of your own risk tolerance profile and how the advisor interprets that risk. Investing can be very financially rewarding or devastating if not properly done. While there are some sound, legitimate alternative investments available, not all investment vehicles or strategies are suitable for everyone. Even the most common investment, mutual funds, are not created equally. It’s paramount that investors fully understand what they are purchasing, and how the investment strategically fits into a well-designed and diversified portfolio. Be educated on the “role” certain investments may play in the portfolio. It’s crucial to review both the financial plan, investments, and risk profile with your advisor at least once a year. Remember, markets change as do the investors personal situations, therefore it’s ok to make adjustments and rebalancing investment holdings if and when needed.” ~Cyndi Barnett, Certified Financial Planner™ of GPS Wealth Management[1] In 2016, FINRA brought 1,434 disciplinary actions against registered brokers and firms; levied $176.3 million in fines; ordered $27.9 million in restitution to harmed investors; and referred more than 785 fraud and insider trading cases to the SEC and other agencies for litigation and/or prosecution.