Treat Your Broker/Financial Adviser Like a Boyfriend or Girlfriend: Be Alert for “Red Flags”

By Robert Noens, Spring 2017 Intern

Welcome to the third installment of my five-part series: Be Alert for “Red Flags.” Now that you know to research your broker and to make what you want clear to them, I would like to move onto my third step of relationship advice. Here we’re talking about looking for “red flags” during the “honeymoon phase.” In the beginning of any relationship, it is my advice to you to look for “red flags.” Here are two ways to look for those “red flags.”

First, you need to read everything. Additionally, it is important that you read and keep track of all other documents your broker sends you. Without taking this step, you will be unaware when things do go wrong.

Second, ask questions about everything. You may feel annoying at times, but remember: they’re on your payroll, not the other way around. Ask your broker or financial adviser if they are a fiduciary. Ask how they get paid.  Ask them to explain why they recommend a product or strategy and to explain it to you in terms that you understand.  And beware of the common red flags of fraud.  It is important for you to be aware of what is going on and know why things are happening. Otherwise, you may miss a “red flag” in what may seem like a perfect relationship.