Too many conflicting interests exist within the financial services industry. Probably the most common conflict of interest consists of brokers and fund managers who are paid a commission on the funds they sell to investors. You might think that with the implementation of the Department of Labor’s fiduciary rule that the client’s interests would have taken priority. Unfortunately, this is frequently not the case.
Brokers and fund managers routinely choose investment options with a high commission rate to pad their own profits while ignoring what’s actually within the best interest of their investors. Investors everywhere have had enough of these conflicting interests and are becoming more and more concerned with the impact on their investments.
When brokers choose investments based on a high commission without informing themselves of the likelihood that the investment will be a success, it creates disaster for investors. Their investments fail, and they lose money.
While losses are always a risk of investing, it’s important that the broker managing your investment is doing their best to choose options that have a successful outlook. Ignoring tell-tale signs of investment failure to make money for themselves is not only a bad business practice, but it’s a clear conflict of interest.
Stocks and funds that continue to fail drive the price up on other investment opportunities. However, these opportunities are limited to options the broker presents as viable. When they then fail, investors will keep investing because they know failure is a risk and the return they see is worth the risk.
When an investor keeps losing money while the prices are driven up, they may choose to invest elsewhere or stop investing completely, which could have devastating consequences on the economy.
Investors all over the world have had enough. They are calling for a transparency in the payment structure of funds and brokers to better protect their money. Many are also calling for stricter regulation on conflicts of interest that can impact investor portfolios.
Speak with a knowledgeable securities fraud attorney at Meissner Associates if you believe your broker has put their interests above your own by calling 1-866-764-3100. You can also complete the form on our website. Find out if you’ve encountered fraud that needs to be reported to the SEC today.
