Wouldn’t you have thought that your financial adviser is obligated to act in your best interest when advising you where to put your retirement money? Well, sadly, you would have been wrong if you did. Advisers currently are not obligated to put your interests ahead of their own or disclose any conflicts that benefit them to your detriment. Financial advisers can legally steer customers to inappropriate investment vehicles that include excessive fees, hidden commissions and hard-to-liquidate positions.
In a well-publicized case, a retired mechanic and his wife, a fourth-grade teacher, found out the hard way that their financial adviser was not acting in their best interest when advising them to transfer the bulk of their savings into what were claimed to be “low-risk” investments. In fact, their adviser collected nearly 10 percent in commissions for placing them in illiquid real estate investment trusts and actively traded risky options accounts, reducing their modest savings by $125,000.
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