{"id":205233,"date":"2021-03-18T13:20:00","date_gmt":"2021-03-18T10:20:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/opinion-its-time-to-stop-calling-brokers-financial-advisers\/"},"modified":"2021-03-18T13:20:00","modified_gmt":"2021-03-18T10:20:00","slug":"opinion-its-time-to-stop-calling-brokers-financial-advisers","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/opinion-its-time-to-stop-calling-brokers-financial-advisers\/","title":{"rendered":"#\n  Opinion: It\u2019s time to stop calling brokers \u2018financial advisers\u2019"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3b86edc0420\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3b86edc0420\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-its-time-to-stop-calling-brokers-financial-advisers\/#Regulations_and_reforms_to_protect_investors_arent_working_and_need_repair\" >Regulations and reforms to protect investors aren\u2019t working and need repair<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/opinion-its-time-to-stop-calling-brokers-financial-advisers\/#Pam_Krueger\" >Pam\u00a0Krueger<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Opinion: It\u2019s time to stop calling brokers \u2018financial advisers\u2019<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Regulations_and_reforms_to_protect_investors_arent_working_and_need_repair\"><\/span>\n  Regulations and reforms to protect investors aren\u2019t working and need repair<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000203354\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       A recent story about a 94-year old woman whose grandsons criminally mismanaged her wealth is just another reminder of how years of attempts to rein in the excesses of the brokerage industry have done little to protect consumers from harm.<\/p>\n<div class=\"paywall\">\n       For years, Florida retail matriarch Beverly Schottenstein trusted her two grandsons, both so-called financial advisers at brokerage giant Morgan Stanley, to manage her investments. They exploited her trust by committing various kinds of fraud. According to a complaint Schottenstein filed with FINRA, the private body that oversees the brokerage industry, the grandsons forged her signature on key documents and bought and sold risky and expensive securities without her permission, resulting in losses of more than $10 million while generating hundreds of thousands of dollars in commissions for both themselves and Morgan Stanley.<\/p>\n<p> Siding with Schottenstein, FINRA ordered Morgan Stanley to pay her $19 million. While that sounds like a h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>y ending to a sordid tale, it could have gone otherwise. Under FINRA rules, Schottenstein could not legally sue her grandsons or Morgan Stanley directly. She had to file for arbitration through FINRA, where the outcome is decided by a panel of industry insiders, not a judge or jury. That\u2019s the only legal recourse for consumers who work with brokers.\u00a0<\/p>\n<p>While Schottenstein\u2019s situation was unique in that her own grandchildren cheated her, it\u2019s only one of many, many cases of financial abuse and fraud that occur each year in the brokerage industry. That such abuses still happen even after endless half-hearted attempts by regulators to legally require brokers to protect their clients from harm demonstrates that many in the brokerage industry are still more committed to earning huge payouts than acting in their clients\u2019 best interests \u2014 also known as the fiduciary standard.<\/p>\n<p>The long history of brokers exploiting clients created such negative connotations about the title that a couple of decades ago brokerages started marketing their salespeople as \u201cfinancial advisers.\u201d<\/p>\n<p>The problem is that \u201cfinancial adviser\u201d is a manufactured title. It has no legal standing whatsoever and is designed to create the illusion that brokers offer objective investment advice, rather than simply sell products on commission. The big brokerage companies are trying to blur the line between brokers and fee-only investment advisers, who are legally required to act as fiduciaries for their clients \u2014 and can be sued when they don\u2019t.<\/p>\n<p>The most recent watered-down compromise both sides reached in 2019, Reg BI, was a consumer-unfriendly set of rules that gives brokers huge loopholes to avoid what was, at best, a lukewarm level of fiduciary responsibility.<\/p>\n<p>Caveat emptor (buyer beware) applies when consumers are buying a car but is it really appropriate when considering hiring an adviser to manage their money? Unfortunately, the Schottenstein saga proved that consumers must conduct their own extensive due diligence before making such a critical decision.<\/p>\n<p>Reg BI and other so-called reforms simply aren\u2019t working. While it would be nice for regulators to adopt a uniform fiduciary standard for all advisers, it\u2019s unlikely to happen anytime soon.\u00a0<\/p>\n<p>So why bother? Instead, let\u2019s just do away with this fiduciary fuzziness and make a clear distinction between brokers and fiduciary investment advisers who are legally required to do no harm to clients.\u00a0<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>Brokers could openly and proudly proclaim that they work as commissioned salespeople. They wouldn\u2019t be bound by any kind of fiduciary mandate. Consumers would know up front that brokers were legally allowed to recommend products that offered them the best payouts. After all, real estate agents and car salespeople work the same way, so why shouldn\u2019t investment salespeople? If people still want to work with a broker knowing that their legal options are limited, all the power to them. Caveat emptor!<\/p>\n<p>For everyone else who wants the peace of mind in knowing that their investment professional is legally obligated to act in their best interests, a fee-only investment adviser is the only choice.<\/p>\n<p>Still, even fee-only investment advisers can \u201cgo rogue,\u201d although they\u2019re less incentivized to do so since they\u2019re paid directly by clients. That\u2019s why it\u2019s important for consumers to conduct their own research on any investment professional they\u2019re considering and make sure their assets are held at a respected discount brokerage. The Investment Adviser Public Disclosure website (<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/adviserinfo.sec.gov\/\" class=\"icon none\">https:\/\/adviserinfo.sec.gov\/<\/a>) is where you can research the backgrounds and disciplinary history of investment advisers. (Those who still want to work with brokers can do the same thing at Brokercheck [<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/brokercheck.finra.org\/\" class=\"icon none\">https:\/\/brokercheck.finra.org\/<\/a>])<\/p>\n<p>When you interview any adviser you\u2019re considering, ask them to explain how they\u2019ll act in your best interests and if they\u2019ll provide you with a fiduciary oath in writing. If they won\u2019t, you\u2019ll at least have the information you need to decide whether to take a chance \u2014 or walk away.<\/p>\n<p><em>Pam\u00a0Krueger\u00a0is registered financial adviser and the founder &amp; CEO of Wealthramp, a referral service that matches consumers with fee-only financial advisers. She is also the creator and co-host of MoneyTrack on PBS and Friends Talk Money podcast for PBS Next Avenue.\u00a0<\/em><\/p>\n<p><strong>More:<\/strong> My grandson says my financial adviser is steering me wrong and double-charging me. What should I do?<\/p>\n<p><strong>Also read: <\/strong>If a financial adviser can\u2019t say \u2018yes\u2019 to these 2 revealing questions, save your money for one who can<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Pam\u00a0Krueger \",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Pam_Krueger\"><\/span>Pam\u00a0Krueger <span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D31A5ADC7EEA%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Opinion: It\u2019s time to stop calling brokers \u2018financial advisers\u2019 &#8221; Regulations and reforms to protect investors aren\u2019t working and need repair A recent story about a 94-year old woman whose grandsons criminally mismanaged her wealth is just another reminder of how years of attempts to rein in the excesses of the brokerage industry have&#8230;<\/p>\n","protected":false},"author":1,"featured_media":85984,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-205233","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/205233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=205233"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/205233\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/85984"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=205233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=205233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=205233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}