Many people work their entire lives to accumulate a nest egg of savings for retirement. Others find financial success mid-career. Either way, accumulating money can be surprising in one respect: wealth often leads to stress.
Why? Because it can be extremely stressful to realize that the fruits of your entire life’s work can be wrapped up in one Merrill Lynch, Morgan Stanley, or Citigroup account statement. Retirees know how long it took to accumulate their 401K accounts. Business people know how hard they had to work (or how lucky they had to be) to make their money.
In short, the money is irreplaceable. During the financial crisis 2008, many investors lost huge portions of their life savings as a result of negligent or foolish recommendations by their brokers. Smart people should ask themselves the following questions:
How safe is my money?
Who is this guy or gal making recommendations to me?
Is he or she any good?
What to do:
First, check out your broker. It is not enough that your broker is friendly or a “good guy.” All brokers are friendly. They are salespeople and make their living by being friendly. That does not mean they know what they are doing.
FINRA maintains a public database available on the web at www.brokercheck.com, which allows investors to look up the disciplinary record of their brokers. Find out if your broker has ever been sued for negligence or mismanagement in the past.
Second, communicate your objectives. If you want safety, make sure you tell the broker you want safety. Make sure you see the words “safety” or “conservative” in writing in the brokerage firm records.
Many times, the investor will tell the broker he wants conservative investments. The broker will turn around and write “aggressive” in the internal brokerage firm records, because the broker knows he or she will receive less supervision over an “aggressive” account than a “conservative” one. If you want safety, make sure you tell that to the brokerage firm and make sure the brokerage firm records it in their records.
Third, make an effort to understand your investments. Many people, even wealthy people, have very little investment experience or acumen. Investments may not be your “thing.” But given that you have so much of your life’s work sitting in one or two single account statements, make the effort. If you don’t understand how the investment works, don’t agree to buy it.
Next, question losses. Pay attention to your account statements. If your account starts to lose money, ask the broker why this happened. Get an explanation that you understand. If you are uncomfortable with the losses, make sure the broker knows and understands you cannot tolerate large fluctuations in the account.
Finally, talk to a securities lawyer. If you sustained large losses and believe you have been mistreated, speak to a knowledgeable securities lawyer. Most securities lawyers work on a contingency fee. This means the lawyer does not get paid unless he or she wins. For that reason, lawyers are incentivized to find cases of wrongdoing and give an accurate assessment of the case. Securities lawyers don’t want to invest time and energy into a marginal case. If a skilled securities lawyer believes you have a case, you probably do.
Feel free to contact our firm for a confidential and free evaluation of your case. We have assisted investors in recovering millions of dollars from Wall Street brokerage firms.