Your Financial Advisor – Trust but Verify

BY ROBERT FEELEY
Entering into any professional relationship requires a certain level of trust. Doctors, lawyers, even butchers and bakers. You pay them to provide a product or service a service and you trust they will do what is in your best interest.

A financial advisor holds your fortune in his or her hands, and the thought of malpractice, misconduct, or incompetence is the kind of thing that can keep you from sleeping at night. Certainly the case of Bernie Madoff brought financial advisor relationships into a very bright spotlight.

Forbes has published 5 deceptive tricks that some financial advisors may use to grow their income while shrinking yours:
With Halloween just around the corner, kids of all ages are excitedly preparing their costumes in hopes of scoring some tasty treats. With this theme in mind, I want to help you decode, dissect, and dismantle some of the top “tricks” financial advisors use, so you can avoid them like the neighbor who gives out apples and toothbrushes on beggar’s night.

Could you be getting “tricked” by your financial advisor? Could they have a skeleton in their closet? Fill your trick-or-treat bag with these 5 deceptive tricks, not treats financial advisors use

1. Hatchet Job – quite possibly the nastiest of all tricks is the “hatchet job” where your advisor appears to be independent and working in your best interest, but when you take off the mask of this supposed impartiality you find the disgusting truth. Earlier this year, Barron’s wrote an excellent article on this despicable practice about how many brokers and financial advisors that work for big, impressive sounding banks and brokerage firms peddle mutual funds and investments that pay for preferential treatment otherwise known as “Revenue Sharing.” This huge conflict of interest is, of course, disclosed in the mouse print of their disclosure firms, just barely meeting any ethical standard, in my opinion. Revenue sharing is when mutual fund companies pay your financial advisor an extra incentive or commission for pushing their mutual funds instead of other possibly better funds. These back-handed deals can line the pockets of unscrupulous advisors and the companies they work for in a large way. According to one large “independent” brokerage company they earned an additional $124 million in revenue sharing incentives in 2013 alone. Next time you talk to your advisor ask to see a copy of their “Revenue Sharing Disclosure” form and ask if they are recommending funds that pay them more.

If you feel that you are the victim of malpractice by a financial advisor, it is easy to register at our site and learn more about your rights. MalpracticeAttorneys.com services are free to victims of malpractice.

THANKS TO ROB RUSSELL and FORBES, INC.