Consumer Report Reveals How Brokerage Firms Misrepresent Their Services

Brokers offer financial advice to and transact a variety of securities on behalf of millions of investor households. Millions of Americans rely on their brokers to make complex long-term decisions about their retirement and long-term savings plans. Consumer Federation of America (CFA) published a report this week, “Financial Advisor or Investment Salesperson?: Brokers & Insurers Want To Have It Both Ways” that takes a look at when is an “advisor” really an advisor and when are they being salespersons. According to this report, people saving for retirement lose an estimated $17 billion a year or more as the result of the excess costs associated with conflicted retirement advice.

As per the report, it examined 25 brokerage firms, their services and marketing messages and found ambiguity in the way they market themselves to consumers and the way they defend themselves in an arbitration. They present their services to be advice-centric and themselves as trusted advisors in their marketing messages. According to the report, these were the common findings:


  • No website was found to have referred to their financial professionals as salespeople but as reliable advisors indicating that they have a level of sophistication and expertise
  • They typically do not refer to their services as product sales but advice and retirement planning, creating the illusion that the investor is being helped rather than sold to.
  • Marketing messages are intended to make the investor believe that the advisor is always looking out for their best interest.


They create a reasonable belief and expectation that what the investor is getting is fiduciary-standard advice rather than non-fiduciary sales pitch. However, there is a resistance across the brokerage industry to being held up to a fiduciary standard. Industry groups representing brokerage firms, have been trying to get the DOL Fiduciary rule requiring them to act in the best interest of their clients thrown out. Per the CFA report, these industry groups claim that their professionals are ‘selling’ investment products and do not engage in relationships of ‘trust and confidence with their clients’.

Investors end up paying the price of biased sales recommendations as opposed to unbiased advice, draining their investment savings into the pockets of their brokers and brokerage firms.  It is important for consumers to understand if their advisor is held accountable as a “fiduciary”. The DOL recently posted a 16-page document on their website to help investors, containing a list of questions to ask their financial advisers to determine if they are a fiduciary.

The attorneys at Malecki Law have been helped investors recover millions of dollars lost due to questionable investment advice from brokers who did not act in their best interest.

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