Beware of Your Broker’s Credentials

In the financial world, various designations and credentials follow the names of financial advisors and brokers. Often the credentials will include “certified”, “chartered” and “senior.” The Wall Street Journal recently reported that there were some 210 credentials in the financial industry. That is quadruple the number in 2005, according to the Financial Industry Regulatory Authority (FINRA). Some of the well established credentials include the certified public accountant (CPA), chartered financial analyst (CFA) and certified financial planner (CFP). These require extensive study, continued education requirements and enforce strict codes of ethics. On the other hand, many other credentials require very little and can be obtained with minimal or no study over a weekend.

According to a Wall Street Journal article, some groups offering designations to the financial industry have had members had been fined by FINRA, had sketchy backgrounds, suspended licenses and were teaching advisers questionable sales techniques that would violate regulatory rules. Regulators say that the litany of easily obtainable credentials are aggressively used as marketing tools with hopes of winning the trust and confidence of older, wealthier clients.

Also, just because you broker has a huge media presence, written books, appeared on TV or received honors does not necessarily mean they are the broker for you. For example, actor Larry Hagman from the long running TV show “Dallas” won an arbitration case against his broker, Lisa Detanna, and Citigroup for $11.5 million. Ms. Detanna was a highly esteemed Hollywood broker with a huge book of business, had been named to Barron’s Top 100 Women Financial Advisors and was former President of the Beverly Hills Chamber of Commerce. Another Hollywood broker, Bambi Holzer, had written several books about investing and appeared on the Today Show and NBC Nightly News. On the surface, she appeared to be the perfect broker. Forbes did an article on her in April 2009, entitled “Beware of Your Broker” exposing her regulatory problems, which according to FINRA’s latest CRD Report, includes 2 Regulatory Events, 1 Termination and 51 Customer Complaints.

The Financial Industry Regulatory Authority (FINRA) urges investors to remain diligent by checking their broker’s professional background via BrokerCheck at www.finra.org

Contact Us
Free Consultation: (800) 259-9010