Retirement Fears: Advisor Mistakes Can Be Very Costly To Their Clients

Earlier this year the Financial Industry Regulatory Authority (FINRA) announced that it has fined a major investment company $3 million and ordered it to pay more than $4.2 million in restitution.

Two former registered representatives in its Rochester, NY branch office apparently persuaded Eastman Kodak and Xerox corporation employees to take early retirement based upon unrealistic promises of consistently high investment returns and by espousing unsuitable investment strategies.

FINRA said “at least 184 customers suffered financial hardships, including market losses, a reduction in principal, and the inability to sustain expected withdrawal rates. In many cases, the customer’s initial investment was eroded by market declines and the customer’s monthly withdrawals were not funded by income but were really distributions of principal. Some customers were forced to return to work at a greatly reduced income in order to meet their basic living expenses.”

We always stress the importance of dealing with a competent advisor and an advisor that has been trained in distributions from qualified retirement plans and IRAs. On our web site http://www.irahelp.com/, click on Find an Advisor, and you will find a list of competent advisors in your area that have been trained by Ed Slott and Company on all the current rules on distributions and traditional and Roth IRAs. A comfortable retirement starts with accurate IRA advice.

Another type of scheme is ensnaring many small businesses. One of them is a radio personality. We’ll call him I.M. Caught. Mr. Caught's accountant recommended a way to reduce his taxes. The plan went like this:

CLICK HERE TO READ ABOUT THE PLAN

By IRA Technical Consultant Marvin Rotenberg and Jared Trexler
------------------------------------------------------------------------------
Comment, Question, Discussion Topic on your mind? Click on the Blue Comment Link below and leave your thoughts then check back to see what other consumers and advisors think.

*Copyright 2009 Ed Slott and Company, LLC