Dan Solin's Newsletter, February 16, 2017

Straight Talk About Investor Protection

It seems clear that the Trump administration is hell bent on gutting protection for investors and letting Wall Street have free reign.  This doesn’t mean it’s inevitable you’ll become a victim.  It’s actually quite simple to protect yourself from an industry known for questionable ethics, illegal conduct, and unbridled greed.

Follow these tips and you’ll be fine:

1.  Don’t do business with a broker who won’t confirm in writing that he or she will disclose all conflicts of interest and will always place your interests above their own.  As a practical matter, this eliminates most brokers because they won’t give you this assurance.  It’s not consistent with their business model.

2.  Don’t do business with any advisor or broker who claims the ability to “beat the market”, using stock picking, market timing or selecting mutual funds likely to outperform.  Instead, limit your choice to advisors who espouse “evidence-based investing”, by focusing on your asset allocation, using only low management fee index funds, passively managed funds or exchange traded funds, keeping fees and costs as low as possible and deferring or avoiding taxes.

3.  Confirm that your assets are held by one of the major custodians (like Schwab, T.D. Ameritrade or Fidelity) and that you can access your accounts directly on the website of the custodian.

4.  Tell your employer that you want the advisor to your retirement plan to be a 3(38) ERISA fiduciary.  This means the advisor will always act solely in the best interest of you and your fellow employees.

The government isn’t going to protect you from investment scams and unconscionable conduct from “frenemies”, posing as trusted advisors.  Following these simple tips should keep you out of their clutches.

Dan