Passive Income Blog

Wall Street spends millions of dollars per year fighting disclosure for the credentials, ethics, and business practices of financial advisors. These are the same firms that tell you they believe in full transparency so investors have the information they need to select high quality advisors.

What are they hiding? They have a lot to hide. For example, financial services is a high turnover industry so there are thousands of inexperienced advisors selling investment products. Thousands or additional advisors have numerous client complaints on their records, but they stay employed because they produce substantial revenues for their employers. If investors had this information they would not buy from these companies’ advisors.

High industry turnover also explains why there are no minimum education or experience requirements for advisors and the minimum age is 18. Anyone can become a financial advisor, even convicted criminals as long as their crimes were not securities related. These are just a few examples that explain why Wall Street hides information from investors.

Investors are their own worst enemies when they limit their source of information about advisor competence, ethics, and business practices to the advisors themselves. Investors hear what advisors want them to hear. Advisors omit what they do not want investors to hear and they misrepresent information so they sound more knowledgeable than they really are. And, since the information is provided in sales pitches, investors have no written record of what was said to them.

You can’t count on the regulators to protect you from incompetent, unethical advisors who put their interests first. As disagreeable as it might sound, you have to learn to protect your own financial interests from bad financial advice and products that can legal or illegal. It is easier than you think if you follow five common sense principles.

Always conduct a background check before you select an advisor or buy the advisor’s investment recommendations.
Minimize the impact of advisor personalities, sales pitches, and brand names. They have nothing to do with advisor competence and ethics.
Limit your selection to advisors who are willing to provide full, written disclosure for their credentials, ethics, expenses, compensation, and services.
Limit your selection to professionals who Registered Investment Advisors or Investment Advisor Representatives and acknowledged fiduciaries
The advisor should be compensated with fees and not commissions

ABOUT PALADIN REGISTRY

In 2003, Paladin began providing information services to investors who use the services of financial planners and financial advisors. Our services include Background Checks, Quality Ratings, Online Documentation, and a service that matches investors to planners and advisors in their communities who achieved the Registry’s highest quality rating (five stars). Visit Paladin’s website PaladinRegistry.com for additional information.

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About the Author:
Jack Waymire was employed in the financial services industry for 28 years. During 20 of those years he was the president of a national Registered Investment Advisory firm. Waymire authored the widely acclaimed book, Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor, that was published in 2003. In 2004, he launched the first generation PaladinRegistry.com website that provides four free services to investors who rely on planners and advisors to achieve their financial goals: Advisor background checks, advisor quality ratings, online documentation for advisor credentials, ethics, and business practices, and a service that matches investors to local financial professionals who achieved the Registry’s five star quality rating.
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