Another Bad Broker
James Bradley Schwartz is charged with making 535 unauthorized trades in four customer accounts from August 2014 through May of 2016. As a broker regulated by the Financial Industry Regulatory Association [FINRA], Schwartz has been barred from the securities industry. Churning is the illegal act of trading securities for the sole purpose of earning a commission. Commissions are a no-win situation for every client because the broker will always be conflicted and discriminatory.
What is amazing is that approximately $194,000 in commissions were generated by Schwartz, resulting in over $650,000 in losses to his handful of clients. FINRA identified and reported that 261 trades were made without client authorization, which included trades placed after one client had died. The utter gall of Schwartz is beyond disgusting.
Dual registration means the individual you are working with is licensed as a broker with a broker/dealer and will sell you commission-based products. At the same time, they work as an investment advisor, and will sell you on their assets under management program, which is a slow-bleed commission-based scheme, and call their compensation a fee. Dual registered brokers are also nearly always licensed as insurance agents, and as a result, prospective and actual clients rarely know or understand which hat commission Charlie is wearing. This is the same problem with insurance companies, broker/dealers, and banks who have multiple divisions, subsidiaries, and relationships, all in the name of "comprehensive" financial planning or some other marketing flim-flam description.
A True Fiduciary
A true fiduciary-based investment advisor is not dual-registered and does not use any form of assets under management [AUM] scheme for compensation. This means your Registered Investment Advisor and all Investment Advisor Representatives are not broker/dealer affiliated and are genuinely working for you and in your best interest.
Golden Flip Flops
When you work with someone who is selling you stocks, bonds, mutual funds, ETFs, real estate investment trusts, real estate, limited partnerships, business development companies, any form of insurance, or lending you money for a mortgage, vehicle, or any kind of consumer credit, and is also claiming to be an investment advisor based on an AUM scheme, you are dealing with a gold plated, commission-based, flip-flopper, and you are one of the clients who paid for the golden flip flops that commission Charlie is wearing.
Don't Work With
Dual Registered Flip-Floppers
Did you listen to the recent Connecting Dots podcast titled: Delegated versus Directed - Oh, So That's Why Charlie....? In this episode, I’ll chat with you about delegated and directed trusts. Moving from what a living trust and the related documents are for estate planning, briefly, we’ll explore the pancake-forced distribution of sudden wealth to stupid people who blow the value of your blood. Strong language and a challenging discussion as I speak about stupid parents who couldn’t save a nickel because everyone burns a hole in the pocket to get out. And we’ll chat about Commission Charlie who wants to be named as the legacy advisor to make crazy high commissions for doing, well, not much of anything. Let’s have coffee and chat, then let’s think about it.
Paul Grant Truesdell