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Can Your Brokerage Firm be Trusted?
By: Cindy Wendland
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When we ask for financial advice, do we typically trust our broker? Yes. Well, maybe we should be more cautious. The Obama Administration is backing a bill that would require brokers to have fiduciary standards. This would require brokers to put the client’s interests ahead of their own and put more weight on the risk analysis versus the potential commission. Perhaps you, like me, thought they were already doing that.

It appears we make a lot of assumptions about financial advisors that we don’t make in other areas. We know we should get three opinions before going through medical treatment. We know that just because a person has their driver’s license, it doesn’t make them a safe driver. Yet, we assume that because a broker is licensed, they are trusted and will put our interests first. 

It is recommended that before committing to a broker, a person should look up their licenses and make sure they are registered. Another important question to ask a broker is how they are paid. Some funds might be paying the broker to sell them. Perhaps the important issue with a broker is whether the broker is providing you with options that best suit your situation and are the lowest cost, highest yield instrument available to you.

With the current conversation about fiduciary responsibilities in brokerage firms, now would be a great time for fiduciary-minded brokers to make some strong marketing statements. Firms that are licensed, trusted and already approach their customers in this manner can advance their market position by demonstrating their approach and marketing it. Expect to see some nice marketing campaigns.

   

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About the Author
Cindy Wendland has a background in marketing and finance. She is the creative director for an online men's health magazine, BrainBrawnBody.com, and she gets to write their leisure/travel blog. She is also a web designer helping her clients with online community engagement, websitesbywendland.com. Prior to her web years, she worked in pharmacy consulting.
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