FINRA is far from a shadowy regulatory agency. They do their best to find themselves in the public eye, if only to keep investors informed on current regulations and scams. They also keep an exhaustive database of the professional records of all registered broker-dealers and financial advisors; the database is online and searchable. FINRA’s BrokerCheck is a mighty tool for investors seeking to learn more about their advisors; it’s one of many tools and rules that investors can use to protect themselves against fraud and malfeasance.
The last few months have been a difficult time for many investors. The stock market has taken a major dive, closing out 2018 with the worst performing December since The Great Depression. With so much volatility, it’s crucial that investors have a carefully planned portfolio with an adequate amount of diversification. Above all, that portfolio should match the individual investors risk tolerance and investment objectives. That match must be valid from the day it was made until today. A portfolio that worked for an individual investor in a bull market may be a terrible match for that same person in a bear market.
As baby boomers hit retirements, bringing with them the largest amount of wealth a single generation has ever possessed, regulators at the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) foresee an ever growing number of financial scams designed to separate boomers from their hard-earned savings.
In order to reform the system, investor advocacy groups have suggested the SEC enhance the standard to which brokerages and brokers are held with regard to investor best interests. Currently the standard is based on the necessity of matching investor and investment through a concept known as "suitability." Investor advocates like PIABA, however, want to raise the bar to the "best interest” standard.
From February 2011 to December 2015, Citigroup displayed to investors, brokers, and supervisors inaccurate ratings related to more than 1,800 equities, or more than 38% covered by the firm. These mistakes included the wrong execution recommendations (“buy” instead of “sell”); ratings which were mixed up between securities; or non-ratings for securities which were actually rated.
There’s a universe of advice and information out there for investors looking to educate and protect themselves. Tune in to MSNBC or visit TheStreet.com and you’ll find a million answers to million different questions related to investing intelligently. But for all this “noise” about investing, there is some basic, critical information you probably will not hear about that could make all the difference to your financial well-being.