The vast majority of investors enjoy good working relationships with their brokers, who are sometimes called financial consultants (FCs) or financial advisers (FAs), depending on the firm where they work. But difficulties do occasionally occur — ranging from minor problems, such as mistakes on your brokerage statement or investor profile, to more serious problems, such as concerns about inappropriate advice or even fraud.
To protect yourself and your accounts, you should know:
How to avoid potential problems
How to spot when things are going wrong
What steps you can take to remedy the situation
As in most things, active prevention is the best approach. And for those problems that you can’t prevent, there are regulations and processes in place to help you achieve a fair resolution.
All in a name
You may hear brokers referred to as registered representatives (RR).
The terms are actually synonymous and interchangeable. All brokers are registered reps, and all registered reps are brokers. They’re licensed to buy and sell investments for clients, and for themselves or their firms. Registered investment advisers (RIA),
on the other hand, are regulated under the Investment Adviser Act of 1940. They provide advice and money management but aren’t licensed to buy and sell investments. Some people are both RRs and RIAs.
