As sure as Spring follows Winter, there will be stories of stockbrokers cheating their clients. The latest appeared in the local paper on Sunday. It was about a stockbroker who sold phony investments to his trusting clients.
While there are certainly honest stockbrokers, when was the last time you heard about a NAPFA-Registered Financial Advisor who sold phony investments to their clients?? Stockbrokers are simply salesmen, who make money when they SELL something to somebody . . . anybody. NAPFA-Registered Financial Advisors don't sell anything to anybody. They don't earn commissions. They are paid a flat rate, which increases when the client's portfolio increases in value and decreases when the client's portfolio decreases in value. They invest money for their clients and don't sell anything.
Frankly, I think Congress should pass a law requiring every person to have a tattoo on their writing hand that says "Never invest with anybody who does not use a third-party custodian to hold the assets of the client and send honest financial statements to the client." Okay, that might be a little long for small hands, but it is a big point -- a huge point -- and must never be forgotten.
Also, I think an investor should be very suspicious of any stockbroker or financial advisor with wildly expensive tastes. Without exception, every financial planner I know lives and breathes the religion of low-overhead expenses. I don't know any planners who drive Rolls-Royce cars or live in $5 million mansions. Even those who could live wildly expensive lifestyles, would find it a violation of everything they preach.
And, of course, as sure as Summer follows Spring, there will be another article in some newspaper in the near future about even more clients who were defrauded by their stockbroker!
While there are certainly honest stockbrokers, when was the last time you heard about a NAPFA-Registered Financial Advisor who sold phony investments to their clients?? Stockbrokers are simply salesmen, who make money when they SELL something to somebody . . . anybody. NAPFA-Registered Financial Advisors don't sell anything to anybody. They don't earn commissions. They are paid a flat rate, which increases when the client's portfolio increases in value and decreases when the client's portfolio decreases in value. They invest money for their clients and don't sell anything.
Frankly, I think Congress should pass a law requiring every person to have a tattoo on their writing hand that says "Never invest with anybody who does not use a third-party custodian to hold the assets of the client and send honest financial statements to the client." Okay, that might be a little long for small hands, but it is a big point -- a huge point -- and must never be forgotten.
Also, I think an investor should be very suspicious of any stockbroker or financial advisor with wildly expensive tastes. Without exception, every financial planner I know lives and breathes the religion of low-overhead expenses. I don't know any planners who drive Rolls-Royce cars or live in $5 million mansions. Even those who could live wildly expensive lifestyles, would find it a violation of everything they preach.
And, of course, as sure as Summer follows Spring, there will be another article in some newspaper in the near future about even more clients who were defrauded by their stockbroker!
