Ask Your Broker These Key Questions

According to the Economic Policy Institute (EPI), undisclosed conflicts of interest between investors and advisors costs investors an estimated $17 billion per year. The EPI came to this estimate by calculating the amount of investment losses for people who bought retirement products on recommendation from advisors who were paid on commission; many of these products were either more expensive or risky than was absolutely necessary.

How can you avoid being caught in this enormous trap?

Ask questions. In many ways, you will be asking several versions of the same question: Are you a fiduciary, and how so?

Three Questions to Ask Your Broker

Here are three ways you can ask that all-important question when faced with the recommendations of a financial advisor you think - but aren’t sure - is acting in your best-interest:

What qualifications and certifications do you have?

Regulators have repeatedly warned that many financial advisors and planners will throw an alphabet soup of accreditations at you in order to convince you of their fidelity. While “financial planner” means nothing; “certified financial planner” is a powerful designation.

How do you make money?

Most of all, you need to understand how your advisor makes money off of your money. Certain advisors are “fee-only,” meaning they charge a flat-rate for their advice and services. Others are “fee-based,” meaning they may receive outside incentives for the sale of certain products in addition to their fees on the account itself. They sound alike but they are worlds apart.

Do you have a record of misconduct?

Somehow it’s not common knowledge, but far too many brokers and financial planners have checkered professional records, even those who work for major, reputable firms. You should ask your broker if they have ever been accused of misconduct - to see what they say. But you should absolutely also corroborate what they have told you using the financial industry’s professional record service, brokercheck (FINRA BrokerCheck).

PA & NJ Broker Misconduct Law Firm  

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If you or someone you love has been the victim of broker misconduct or securities fraud, please contact our team of attorneys toll-free at 215-462-3330 or via our online contact form.

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