Lessons from the Option of Last Resort: Be Skeptical

By: Robert Noens, Fall 2017 IAC Student Intern

This is my final entry in my final five-part series, and I would like to leave any readers with this one lesson: be skeptical and don’t blindly trust your broker. Your instinct may tell you to trust your broker, or that they are always acting in your best interest. The harsh reality of that, however, is not true.

Currently, brokers are not automatically fiduciaries (For more information on this please watch this link/video to a Last Week Tonight segment by John Oliver. It explains the relationship between brokers and fiduciary duties or the lack thereof. Please note: the video contains language that some viewers may find offensive). For this reason, and others, it is important for you to get to know your broker, read what you are given, and, most importantly, understand what you are getting into (for more help with this, please see my previous five-part serious about addressing these issues).

I simply cannot stress enough how important it is to understand the different risk levels there are when investing or just how complicated some concepts may be once you dive-down into the information. It is vital that you ask questions and fully understand the information and all its sub-components. This process is time consuming and difficult, but this is your money! Do not simply hand it over to someone you know next to nothing about.

If a broker does not want to explain things to you until you are satisfied, reach out to their manager, another broker, leave the firm, or get legal help if need be. Remember, the broker works for you, not the other way around. I am leaving you with this message because I do not want others to be in the position my last client was (see part four of this series for more details).

Trials and hearings are expensive, riskier than you would imagine, and prone to digging up and using information against you that thought was long gone or irrelevant. Simply put, trials and hearings should be your option of last resort. Your first option should be to read, learn, and, most importantly, understand. Know everything about what you are doing, and always bring a healthy dose of skepticism to a meeting where your money is being handed over to someone, especially if that someone does not owe you a fiduciary duty.