Arrow-right Camera

The Spokesman-Review Newspaper The Spokesman-Review

Wednesday, November 20, 2019  Spokane, Washington  Est. May 19, 1883
Partly Cloudy Night 36° Partly Cloudy
News >  Nation/World

Survey Shows Financial Planners Mislead Clients

By Associated Press

A majority of financial planners contacted in a new survey misled customers about how they’re paid, hiding the fact that they can receive commissions and other payments for recommending securities.

The Consumer Federation of America said Thursday that the survey conducted with the National Association of Personal Financial Advisors was done by examiners posing as customers.

It looked at how many planners in the Washington metropolitan area were incorrectly calling themselves “fee-only” financial planners.

A fee-only planner is paid only by the customer and receives no commissions or other financial incentives for the sale of stocks, bonds or mutual funds by the companies that offer those investments.

The federation recommends consumers seek fee-only planners for the most objective source of financial advice.

About 14 percent of financial planners legitimately offer fee-only services. Surveys have showed many consumers balk at fee-only planners because they can be charged a sizable up-front payment for the service, even though investors can recoup that money over time since they don’t pay sales commissions to the planners.

The survey of 288 firms showed 58 percent claimed to offer fee-only services but they actually earned commissions or other financial incentives for carrying out customers’ financial plans.

The survey stopped short of accusing the firms of breaking the law and Barbara Roper, CFA director of investor protection, said it couldn’t be determined if consumers would lose money.

Subscribe to the Morning Review newsletter

Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter.

You have been successfully subscribed!
There was a problem subscribing you to the newsletter. Double check your email and try again, or email