Improving Investor Savvy Part III: The ABC’s of Investing

By: La’ Nise Harrington Spring 2017 Student Intern

You may be a newbie to investing or have been investing for years. Either way you probably feel that you know the basics to investing and all the advanced concepts are for your financial professional to handle. However, when FINRA conducted a basic investor literacy quiz most people did not score higher than 50 percent. Part III of the Improving Investor Savvy series moves on to its third question from FINRA’s July 2015 National Financial Capability Study.

How well do I know the basics of investing?
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Improving Investor Savvy Part II: Investigating Your Financial Professional

By: La’ Nise Harrington Spring 2017 Student Intern

Would you give your money to a stranger for safekeeping? Probably not, at least not without figuring out how trustworthy they are. So why would you do the same with your broker or financial professional? While they might owe you a fiduciary duty, a fancy office and a company name does not negate the fact that they are still a stranger. Part II of Improving Investor Savvy adds a second question from FINRA’s July 2015 National Financial Capability Study you should ask in order to increase your investment knowledge and improve your investment behavior.

Have I looked up the background of my financial professional?

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Iannarone and Edwards Comment on Proposed Delay of Fiduciary Rule

Investor Advocacy Clinic Director and Assistant Clinical Professor Nicole G. Iannarone, along with Professor Benjamin P. Edwards, currently at the Barry University Dwayne O. Andreas School of Law and joining the UNLV William S. Boyd School of Law this fall, recently commented on the Department of Labor’s recent proposal to delay implementation of the fiduciary rule. Their comment, available in full here, opposed the proposed sixty day delay for three reasons.  First, they argued that the proposal would undercut years of study and work that created a rule that will help investors save for their future.  Second, they noted that the financial services industry is prepared to implement the rule now and a sixty day delay will cost retirement investors $147 million in just one year.  Finally, Iannarone and Edwards argued that the rule should be implemented as planned to provide the necessary data to undertake the examination of the fiduciary rule as ordered by President Trump in his February 3, 2017 memorandum.  Professors Iannarone and Edwards continue to research the substantive questions raised in the President’s memorandum and plan to file a comment letter answering those questions before the April 17, 2017 deadline.

Improving Investor Savvy: A Five Part Series

By: La’ Nise Harrington Spring 2017 Student Intern

Money Talks, but many people don’t question themselves about their own investments. This five-part series, FINRA’s July 2015 National Financial Capability Study, will outline five questions that every investor should ask themselves in order to increase their investment knowledge and improve their investment behavior.

What Do I Own?

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Selecting a Stockbroker—Part V

Law IAC
Hector Rojas, Spring 2017 Student Intern

Recap…

We have covered a lot of information in this series. Regardless of if you’re just joining us or have been with us since part one of this series, here is a brief review of what we have discussed thus far. In part one of this series, we discussed who a broker is. There we learned that brokers execute orders on behalf of their clients and are paid a commission of the sale. Additionally, we discussed the two general categories of brokers and why this matters to investors.

In part two of this series, we discussed the role of the broker, who governs brokers, and by what standard their conduct is governed. The takeaway point of part two is that investors should be aware that their brokers are under an obligation to know their customers and to only make a recommendation after having a reasonable basis to believe that a product is suitable for them.

In part three of this series, we tied together all of these concepts and informed our readers of the significance of properly vetting their broker. We discussed that a potential benefit of taking the time to get to know your broker through independent research is minimizing the potential for broker misconduct and investor fraud.

In part four of this series, we offered various tools to help you learn more about your broker and the firm for which they work. In the last and final part of this series we will discuss some of the tips the Securities and Exchange Commission has provided to help investors when selecting their broker.

SEC’s Tips for Selecting a Financial Professional
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Selecting a Stockbroker—Part IV

Law IAC
Hector Rojas, Spring 2017 Student Intern

So far in this series, we have defined the term broker, discussed their role, how their conduct is governed, and why this matters to you. In part four of this series we will discuss some of the tools available to investors to learn more about their brokers.

How do I learn more about my broker?

Brokers have a report card, called a CRD.  The CRD is a computerized database with information about most brokers, some investment advisers, their representatives, and the firms they work for. The CRD provides information about brokers’ educational backgrounds, regulatory problems, and investor complaints.  One of the main tools available to investors to get information from the CRD is through FINRA’s Broker Check program.

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Selecting a Stockbroker—Part III

Law IAC
Hector Rojas, Spring 2017 Student Intern

Thus far in our discussion of selecting a financial broker, we have discussed what a financial broker is, what their role is, who governs their conduct, and the standard of care brokers must follow. In part three of this series, we will tie together all of these concepts and discuss why this matters to the investor. By the end of part three, you will understand the importance of properly researching and selecting your broker and how this simple, but important step, can help avoid broker misconduct and investor fraud.

Why does this matter?
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