Watch Calling Yourself a Financial Planner

Crabcake Johnny

Guru
5000 Post Club
14,809
Maryland
...got this agent in hot water - offering the old plater licker specials to seniors then selling annuities.

http://www.news-leader.com/article/...order+against+Springfield+investment+adviser+

"According to the order, the adviser, Tracy W. Mitchell, used free lunch investment seminars to promote himself as a financial planner offering financial advice – mostly to senior citizens.

Mitchell allegedly recommended and sold only insurance products, specifically equity-indexed annuities, without disclosing conflicts such as the large commissions he stood to gain on the sales.

According to the order, Mitchell conducted six free lunch seminars from October 2008 to July 2009, and recommended an equity indexed annuity to all but one of the 32 attendees he subsequently met.

“Unfortunately, these free lunch seminars continue to be popular in Missouri, so investors should remember that there is no such thing as a free lunch,” Carnahan said.

“My office will continue to go after anyone who targets elderly Missourians only to offer inappropriate investment advice.”
 
Let's be sure we understand this article:

-Tracy Mitchell IS a licensed financial planner to offer investment advice - because he is a Registered Investment Advisor. As such, he is required BY LAW to disclose certain conflicts of interest.

So... if you are ONLY a life-licensed agent, you can do everything that Tracy did... without offering securities advice and worrying about conflicts of interests.
 
Let's be sure we understand this article:

-Tracy Mitchell IS a licensed financial planner to offer investment advice - because he is a Registered Investment Advisor. As such, he is required BY LAW to disclose certain conflicts of interest.

So... if you are ONLY a life-licensed agent, you can do everything that Tracy did... without offering securities advice and worrying about conflicts of interests.


Thank you!!! I was worried for a min.
 
Hold up a sec--

Mitchell allegedly recommended and sold only insurance products, specifically equity-indexed annuities, without disclosing conflicts such as the large commissions he stood to gain on the sales.

How in the HELL is a commission earned a 'conflict'? One of you dudes commenting on this kindly explain this to me. Please and thank you.

(Don't misread me; I am ALL about kicking punks to the curb but I don't see it here. And don't try to twist and say Seniors shouldn't be sold EIAs. Some should, some shouldn't, that's not the point being reported here.)
 
In addition to being a licensed insurance agent... he is ALSO a Series 65 licensed Registered Investment Advisor... and promoted himself as such.

RIAs work under the Prudent Man standard and are always to work for the client's best interests. As such, all conflicts of interests must be disclosed.

For example: If you were looking to invest $1,000,000 into a product, you could do it in a fee-based portfolio at 1% fee to the advisor (or $10,000/year) or put it into an FIA and earn 10% (or $100,000 up front).

The compensation difference warrants a disclosure regarding the conflict of interest of being more "in favor" of the FIA over the fee-based portfolio.

A true ethical advisor WON'T CARE about the compensation and simply does what's best for the client. However, RIAs work under the Investment Advisor Act of 1940 and must disclose to the client where the advisor's judgment may have a conflict.

You cannot regulate ethics, but even RIAs must try to show true transparency behind all recommendations.

Clear as mud?
- - - - - - - - - - - - - - - - - -
Sorry, I meant "fiduciary" standard is applied to all transactions as an RIA.

If you are acting NOT as a "fiduciary", then you need to verbally state the distinction.

Fiduciary - Wikipedia, the free encyclopedia

When a fiduciary duty is imposed, equity requires a stricter standard of behavior than the comparable tortious duty of care at common law. It is said the fiduciary has a duty not to be in a situation where personal interests and fiduciary duty conflict, a duty not to be in a situation where his fiduciary duty conflicts with another fiduciary duty, and a duty not to profit from his fiduciary position without express knowledge and consent. A fiduciary cannot have a conflict of interest. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd"[3] and that "[t]he distinguishing or overriding duty of a fiduciary is the obligation of undivided loyalty."[4]

Acting as an insurance agent does NOT require such a disclosure.

Personally, I always act in the best interests of my clients... whether with my own products or recommending another professional. I always recommend what I would do if I were them. However, I am NOT an RIA (anymore), nor securities licensed (anymore) so I don't have to worry about all that extra disclosure and wondering which "hat" I'm advising my clients under.
 
Last edited:
Personally I think it makes perfect sense. Don't get a securities license.
 
Back
Top