December 4, 2018 Comments (0) Blog, Publications

BottomLine Inc.: Beware Brokers Who Run Up Charges

excessive trading

You don’t expect your investment broker to play tricks on you—so it is possible that you haven’t noticed that the broker has been churning your account, needlessly buying and selling assets to generate trading fees at your expense.

Yes, this is something that happens, and in bull markets especially—it’s easier for brokers to get away with because in the face of healthy returns, investors tend to ask fewer questions and pay less attention to account statements and trade confirmations.

Brokers are not necessarily “fiduciaries,” so under the law, they may not be required to act in the client’s best interest—only to recommend investments that are “suitable.” Although brokerages had been shifting away from ­commission-based accounts and toward annual fees, that trend has halted and, in some cases, reversed. Self-defense…