Your Stock Broker Doesn't Love You


A long time ago, I had an excellent training course on the effects of your phycological constitution on your financial decisions and other life decisions. I loved what I learned and I applied it in many aspects of my life, but the instructor told me one thing that made me happy. stuck to the head all the time and I always repeat his words to my clients. Speaking of financial advisers, he asked, "And he does all this work for you because he loves you?" He pointed out that people's motives are not always as well intentioned as we might think and that some relationships are more contradictory than we may think.

Unfortunately, this contradictory relationship is all the more dangerous as it is so veiled or disguised that a party was deceived into thinking that this had never been the case. This can happen especially with your financial advisor. The truth is not that all financial consulting relationships are established in the same way. The investment industry has evolved so that different advisory relationships are governed by different sets of standards. The big problem is that the average investor does not know the difference and the big brokerages would like it to stay that way.

Some financial professionals, known as registered investment advisers, engage in paid activities, are regulated by the SEC and must comply with the fiduciary standard. The fiduciary standard requires that the advisor always act in the best interest of the client. In contrast, investment dealers are regulated by FINRA and work for a commission. They are subject to a lesser measure called the relevance standard, which simply requires brokers to sell investments that they believe are appropriate for the client.

With respect to new legislation that would require all financial professionals to adopt the fiduciary standard, Barbra Roper, director of investor protection at the Consumer Federation of America, said: "The average investor would be dismayed to see how certain members of the financial industry strive to avoid acting in the best interest of their customers ".

Arthur Levitt, former president of the Securities and Exchange Commission (SEC) of the United States, said his brokers operating under less favorable standards were called upon to call stockbrokers, "good people stuck in a bad system ". He also stated that "the system in which brokers operate is always focused on volume sales and not on objective advice". Strong words of the former head of the SEC.

The purpose is not to say that all brokers are mean and eager to get you, but when you are trying to decide what to do with your life savings, you may want to make sure the person you are talking to works with a system designed to: put your interest first and not the broker's interests that they represent or even worse themselves. You can start by determining it BEFORE investing money to find out if your advisor is a trustee or a broker. How? Ask before investing. If they tell you that they act as a broker, even some of the time, you can easily determine what is their true motivation. PS They do not like you!

Investment advisory services provided by Horter Investment Management, LLC, a registered SEC investment advisor. Horter Investment Management does not provide legal or tax advice. Investment advisors of Horter Investment Management representatives may only deal with residents of states and jurisdictions in which they are properly registered or exempt from registration obligations. Insurance and annuity products are sold separately by ECA Marketing. Securities transactions of Horter Investment Management's clients are handled by Trust Company of America, TD Ameritrade and Jefferson National Life Insurance Company

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