rds. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable forWho’s watching out for your interests, as an investor? If a car maker produces faulty brakes or a toy turns out to be a choking hazard, there are government agencies and commissions to protect the consumer. But when investors need justice, where do they turn? The answer may surprise you.

There is recourse for investors who have been subject to outright fraud. What about investors who lose much of their life’s savings because of their advisor’s inaction? Here’s a true-life example. ‘Bob’ retires in 2000 and entrusts an advisor with his $750,000 retirement nest egg. The advisor assures Bob that he will watch and take action when needed. Three years later, Bob’s account is only worth $350,000 because his advisor failed to act. What recourse does Bob have?

It used to be that investors could turn to the courts. Not any more. In 1987, the Supreme Court ruled that investors can be required to waive their right to sue in court in order to open a brokerage account. Many of the arbitration judges are industry insiders and even though 55% of the rulings have been in favor of investors, the awards are usually just a fraction of the actual loss. No wonder Wall Street firms prefer arbitration!

Not all advisors operate under the same oversight or standards. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable for

vestors who have been subject to outright fraud. What about investors who lose much of their life’s savings because of their advisor’s inaction? Here’s a true-life example. ‘Bob’ retires in 2000 and entrusts an advisor with his $750,000 retirement nest egg. The advisor assures Bob that he will watch and take action when needed. Three years later, Bob’s account is only worth $350,000 because his advisor failed to act. What recourse does Bob have?

It used to be that investors could turn to the courts. Not any more. In 1987, the Supreme Court ruled that investors can be required to waive their right to sue in court in order to open a brokerage account. Many of the arbitration judges are industry insiders and even though 55% of the rulings have been in favor of investors, the awards are usually just a fraction of the actual loss. No wonder Wall Street firms prefer arbitration!

Not all advisors operate under the same oversight or standards. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable for

en needed. Three years later, Bob’s account is only worth $350,000 because his advisor failed to act. What recourse does Bob have?

It used to be that investors could turn to the courts. Not any more. In 1987, the Supreme Court ruled that investors can be required to waive their right to sue in court in order to open a brokerage account. Many of the arbitration judges are industry insiders and even though 55% of the rulings have been in favor of investors, the awards are usually just a fraction of the actual loss. No wonder Wall Street firms prefer arbitration!

Not all advisors operate under the same oversight or standards. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable for

open a brokerage account. Many of the arbitration judges are industry insiders and even though 55% of the rulings have been in favor of investors, the awards are usually just a fraction of the actual loss. No wonder Wall Street firms prefer arbitration!

Not all advisors operate under the same oversight or standards. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable for

rds. Stockbrokers are federally regulated by the SEC and NASD while insurance agents are regulated by their state insurance commission. When it comes to making investment recommendations, both of these advisors operate under the ‘suitability standard’. This basically means that advice they offer has to be suitable for the investor.

Unfortunately, this definition is a very broad one, and as long as they get you to sign the right paperwork, it doesn’t matter if the investment is really suitable for you or not. They’re off the hook. Bob (like all investors) signed paperwork not realizing that he was virtually relieving the advisor of any responsibility for his actions.

Registered Investment Advisors (like myself) are regulated by the SEC or the states depending on how much money they manage. Regardless, we operate under a much higher standard, called ‘fiduciary responsibility’. We are legally bound to do what is in your best interest, even if it’s not in our own. There is a move to make all financial advisors subject to the fiduciary standard, but Wall Street firms are fighting it tooth and nail.

Here is what you must do to protect your money. First and foremost, choose an advisor with fiduciary responsibility. If an advisor gets paid by commission or the investment is an insurance based product, that advisor is NOT held to the fiduciary standard.

Second, don’t ever rush to make an investment decision. No matter what your advisor may tell you, there’s NO need to make a decision that day. That’s just a sales tactic to pressure you to act before you