Financial Services Industry Overview

Video Transcript

Pat Huddleston: Hi, this is Pat Huddleston with another session of Investor’s Watchdog University. As you know we’ve been talking about scams and scam artists and we’re transitioning now into talking about the financial services industry. We are really honored tonight to have a guest lecturer. I’m talking about Boyd Page, who is fantastic in this area of work. Boyd is actually a founder of the Public Investors Arbitration Bar Association. He’s had fantastic success. And I would tell you that if Investor’s Watchdog University was actually a bricks-and-mortar institution I would go after Boyd to become the dean of Investor’s Watchdog University. So, Boyd, we’re really grateful to have you here. Welcome.
Boyd Page: Well, thank you, Pat. It’s really an honor to be here trying to share at least some of my experiences with investors across the country.
Pat Huddleston: Thanks. Now, I heard characters like financial planners, registered investment advisors, stockbrokers. Tell us what role these people play in the industry.
Boyd Page: It surprised me having practice in this area for over 25 years how many people do not really understand the role that these different people play, but there are a lot of overlap incinerties. In short simple terms, these are financial professionals. The law holds them accountable to satisfy professional standards of conduct. Certified financial planners have certain rules and standards that they have to comply with, as do brokers, as do chartered financial analysts, registered investment advisors, and so on. And investors have the right to expect those professionals to live up to their standards in every day dealings with the investor.
Pat Huddleston: Okay. Terrific. Now, you say that they have to live up to those standards. Where are those standards enshrined in particular?
Boyd Page: Well, for different designations they’re in different places. Brokers, for example, their standards are set up in great detail in the rules and regulations of the Financial Industry Regulatory Authority. They sit there and they go through a list of rules with which brokers must comply. Certified financial planners have their own professional standards of conduct as do chartered financial analysts. So, you need to look in different places. But, while they are slightly different in terms they really have a lot of similarities; there’s a lot of overlap there. The basic duties are fundamentally the same.
Pat Huddleston: Okay. And how do they get enforced? Let’s say somebody transgresses one of those duties.
Boyd Page: Well, it depends. One of the ways they get enforced is by people like me. Obviously, we rely on those and evaluating whether our clients have been dealt with appropriately when they deal with these professionals. The FCC enforces them. The states enforce them. Basically though, if you look at it, while the FCC states do a phenomenal job in many areas they really have very limited resources, so a lot of the enforcement of the rules really is dependent upon the private sector and on these associations which have promulgated the rules.
Pat Huddleston: I got you. Now, I’ve heard people say that investing necessarily involves some risk and if I invest and I lose a whole bunch of money then it must have been my fault because those are the chances that you take when you are investing. Is that always true?
Boyd Page: Well, it certainly is true some of the time. There’s no guarantee. But, at the same time there are many occasions where the broker, the financial planner, the financial analyst doesn’t meet the standards of conduct. He doesn’t provide full disclosure. He doesn’t deal fairly with his client. He doesn’t recommend suitable or reasonable investments for the client. In those cases the losses are generally attributable to the conduct of the professional, not to the market and not to the investor.
Pat Huddleston: Boyd, thanks a lot. Would you agree to come back and speak to us again?
Boyd Page: I would love to. I really appreciate the opportunity and I think what you’re doing is great for the investing public.
Pat Huddleston: Well, thanks, Boyd. We certainly appreciate you being with us here for another session of Investor’s Watchdog University. We hope you’ll be back again next week. Until then class dismissed.
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