Wall Street's Secrets - A SynopsisSubmitted by HearthStone | Private Wealth Management on July 22nd, 2015
APRIL 13, 2015
Wall Street's Secrets - A Synopsis
Wall Street can be a wild and wacky world full of confusing products, acronyms, jargon, and practices.
In late April, Paul Hynes will speak and train on this very topic when he presents to members of the Professional Fiduciary Association of California’s (PFAC) statewide convention in San Francisco.
Since his “tips” are relevant to both professionals and consumers, we thought it worthwhile to share this brief overview.
There are four “secrets” Paul will uncover that, with a bit of insight, can help you navigate this world and protect yourself. They are:
How to tell if an advisor is required to serve the client’s best interest
Some advisors are held to a suitability standard, while others are held to a fiduciary standard. The former means they may recommend an investment as long as they believe it is suitable for the risk profile of the client. It also means that they may recommend an investment that pays the broker a higher commission, even if there are less costly options available. The latter, the fiduciary standard, means a loyalty to the client only, including placing the client’s interest first, dealing fairly and in good faith, and fully disclosing any conflicts of interest that may occur. A fiduciary duty is the highest standard of care required by law.
How to identify obscure, even hidden ways that advisors can be compensated
There are four classes or types of mutual fund shares. Each share class invests in the same portfolio of investments and has the same objectives and policies. But, they have different fees, expenses and performance results. So, why are there different classes of mutual fund shares? Paul will discuss the often murky times and ways that brokers can be paid, depending on the class of share.
How to identify and evaluate confusing advisor credentials. Which are significant? Which are less so?
According to the Wall Street Journal, there were 48 different advisor designations in 2005. By 2010 there were 95. Today, there are over 200!* Paul will help attendees learn how to check out both the credential and the credential holder.
What hidden, often surprising, reasons do advisors have for changing firms?
Some advisors change firms from time to time. Such a move can be a big hassle for both the advisor and the clients. Understanding that most firms are basically the same, why would an advisor want to make a change? Hint: one factor may include a “recruiting bonus” paid to the advisor. Once the magnitude of such a bonus is understood, it’s easier to weigh its potential impact and influence.
This overview skims the surface of key points that Paul will address in full in San Francisco. For a more in-depth report, please contact Hearthstone. We are all about education and welcome the opportunity to share this information in full with you.
*Source: “Is Your Advisor Pumping Up His Credentials,” by Jason Zweig and Mary Pilon, WSJ, October 16, 2010.
According to the Wall Street Journal, there were 48 different advisor designations in 2005. By 2010 there were 95. Today, there are over 200!*