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3 Ways to Protect Yourself from a Wells Fargo Type Scam

Posted by Team HFM on October 04, 2016

1. In all of your service relationships, especially those related to money, ask: 

  • Will this person somehow get paid more by advising me to take one course of action with my money as opposed to a different one that’s available from him/her, or elsewhere?
  • Which of my sources of financial advice, investments, or products, is a “fiduciary”?

Not everyone talking to you or offering you financial products or services is a fiduciary.

 ….The definitions of “fiduciary” and the associated standard of care and obligations are situational.

Some relate specifically to entities and people managing trusts, some to those involved with investment accounts, with additional standards applicable to retirement accounts. 

It includes, among other things loyalty to the client, the obligation to avoid conflicts between the fiduciary’s own interests and those of the client.  In the case of unavoidable conflicts, to mitigate them in a manner that serves the client’s best interests.

Asking whether your service/advice provider is a fiduciary under industry regulations can be your first cut in evaluating whether a true customer-first culture exists at the financial entity or adviser you are considering.

2. Open your financial mail promptly and review it for anything you don’t recognize as yours.

Then what? 4 Simple Habits

3. The only thing we sell at HFM Wealth Management is our advice over time.

We don’t get commissions or trailer fees from any account activity, so that removes a reason to advocate one course of action over another.

We don’t sell securities, mortgages, insurance, bank products, or any other specific products.

The often misunderstood, vague and generic term “financial advisor” is often used in the media as a catch-all term for many people with very different:

  • Education, experience, or registration requirements;
  • Limitations on the universe of what they can offer you to put aside your savings;
  • Fee structures that you have to pay on those offerings.    

Know that a Registered Investment Adviser is a specific, regulation-defined term that refers to a specific type of fiduciary entity that must conduct itself in a particular way. SEC Working with an Investment Professional. Special obligations fall on those who are compensated by providing investment advice.

If you want more information on what is happening with Wells Fargo take a look at this New York Times article Wells Fargo Scandal May be Sign of A Poisonous Culture.