Charles Schwab tells Financial Advisor IQ that many investors believe their brokers are used-car salesmen. He says brokers should keep their eye on the big ball, the millions of investors with 401(k)s who need help. He warns against reinforcing negative industry stereotypes and encourages advisors to act as fiduciaries for their clients. Rita Raagas De Ramos writes for Financial Advisor IQ:
The “advice portion” of what the investing public needs worries Schwab, he says, referring to the quality of advice investors are getting – especially elderly and so-called mom and pop investors.
“The responsibility we have over these people is all important,” Schwab said Tuesday at Sifma’s annual meeting in Washington, D.C.
Schwab noted that many investors are vulnerable and it would be easy for them to “go down the incorrect path.”
He worries that many investors are not being properly looked after by their investment professionals.
“What does fiduciary really mean? What is good advice?” Schwab asked, noting that these are likely the same questions many investors are still asking.
Schwab said the brokerage industry must not squander their client’s trust and must not act in any way that would reinforce negative stereotypes.
“The general public still thinks we’re a bunch of used-car salesmen,” Schwab said.
He qualified his remark by saying he has nothing against used-car salesmen, but they are known to try and quickly sell the cars on their lots.
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