Time and time again we have seen Wall Street companies being ousted for their fraudulent business practices. Just last week five Wall Street banks were charged with a $5 billion dollar fine for rate rigging. It seems as if every financial company is secretly out to get the consumer making it more important than ever to find a company with your best interests in mind.
While the financial landscape is cluttered with companies trying to get your business, here are a few ways to weed out the bad apples:
Stay up to date on Wall Street news and act accordingly
Although the media does not like covering Wall Street fraud (as these companies often have large advertising contracts with them) it is possible to find information. If you’re considering a company and find that they’ve been involved in fraud or shady business practices, take your business elsewhere. The last thing you want is to give these known criminals your money. Likewise, if you currently hold accounts with a company conducting bad business it is a good idea to take your accounts somewhere else.
Find a Financial Advisor working in your best interests
As the financial savvy know there is a difference between those acting as brokers and those acting as fiduciary’s. While the latter are required to work in the client’s best interest, the former are not. The DOL’s proposed fiduciary ruling aims to change that, but in my opinion it still does not go far enough. Many brokers are just salespeople hiding behind the “adviser” label to make themselves look more credible. Just as butchers and dieticians are different, so are brokers and fiduciaries. Be careful when choosing an adviser and stick with the one that adheres to fiduciary standard, instead of just the suitability standard.
Ask the right questions
When it comes to your money it’s better to be safe than sorry. Asking the right questions before you begin working with a bank or adviser is key. You will need to know if the adviser you will be working with is working under the fiduciary standard, what licenses they have, if they are a registered investment adviser, and if they are acting as a fiduciary. If the answer to the last question is no, be sure to ask if they are willing to disclose any conflicts of interest or the amount of commission they receive. If they’re not, you need to find another option. Finding the right bank requires a whole different set of questions. Asking about fees, protections, online banking, and interest rates are all crucial before deciding to open an account.
Overall, the most important aspect of protecting yourself and your money is staying educated. By learning about the company or adviser beforehand and staying up to date on news about the business, you’re sure to create a longstanding and successful relationship.
Chris Markowski has carried the titles of author, investment banker, equity analyst, muckraker, all around trouble-maker, and most importantly consumer advocate. He is the personality behind Watchdog on Wall Street and founder of Markowski Investments.