Does your broker owe you money? Author Daniel R. Solin the author of the book of the same name, wants investors to let him know if they think they have been wronged.

In the financial world (or almost any world for that matter), there are people who seem to have a conflict of interest. Certainly, this title is guaranteed to catch your eye, putting every broker and financial advisor everywhere under a cloud of scrutiny. A scan of the first five top New York Times Best seller list shows that three out of the five titles are about betrayal of some sort: 2. Dude, Where's My Country? by Michael Moore; 3. Lies (And The Lying Liars Who Tell Them), by Al Franken; 4. Who's Looking Out For You? by Bill O'Reilly.

Does every financial advisor and broker have a conflict of interest and provide bad advice? Of course not, there are thousands of advisors world wide routinely operating with great integrity and professionalism.

First words of wisdom. Find yourself a trusted ethical accredited professional advisor that puts your financial needs (suitability) first.

Strong Righteous Words from attorney Mr. Solin, but then he makes his living litigating against the most competitive of arenas, the rarefied atmosphere of the largest global finance companies in the world. Famous in the United States for his book, he is now on the lecture tour, giving CPA's and CFP's at our annual financial planning conference an hour of incredible stories about "What You Should Know About Brokers So That You Can Keep You're your clients from Becoming Their Victims".

For more than 29 years, he has specialised in securities arbitration and complex commercial litigation matters, representing investors and major Fortune 500 clients. He has handled many matters throughout Western Europe, in the Far East (including China and Vietnam), and in Russia. At present, he limits his practice to representing investors who have suffered substantial losses due to the misconduct of brokers and brokerage firms.

Prosecuting Bad Ethics Pays Well. His presentation commenced with a ten-slide expose on the marketing and branding used by investment houses, "Our firm is distinguished by its commitment to building trusting relationships", says such firm, juxtaposed with financial firm malfeasance headlines seen the world over. Seriously, he asks his first question: Which firms paid a record 1.4 billion settlement for misleading their clients? Answer, the biggest and the best: Merrill Lynch, Bear Stearns, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman, Morgan Stanley, Salomon Smith Barney, USB Warburg.

Bad Advice Pays (Solin) Well, Too. Next question, "What kind of investment advice do you often get?" His answer, and that of three Nobel Laureate winners in economics, is bad advice. He feels the average broker is not smarter than the professionals, yet the vast majority of brokers believe in their ability to time the market and pick winners.

The famous Brinson study of 1990s demonstrated that variability of returns in a portfolio is determined by asset allocation, not market timing and stock selection. Only ten active managers beat the S&P large cap index from 1993-1998. True, most investment professionals know this. The focal point of his entire argument is that proponents of actively managed funds (virtually all brokerage firms, mutual fund companies, market timing services, investment press, etc.) stand to gain more in fees and commissions than less passively managed funds. What is not clear is just what was received by the client? Investment advice, a comprehensive financial plan, or just a product?

Is Indexing (passive management) Really Better than Actively Managed Funds? This debate has raged for many years among investment professionals. Not coincidentally, the biggest supporters of this theory are those that sell low-cost index funds. Who is right and how do you as an investor determine where you should place your money? Start with first words of wisdom above.

Is the Investment Product Suitable for you? Most claims for grievance against US brokers centre around one word ? suitability. Did the broker provide the investment advice and product suitable for the client? The question not raised in Mr. Solin's presentation is, though, did the client assume responsibility for his/her decisions? Did he/she comparison shop for an advisor, in the manner one would do for any large purchase, looking for the salesperson with integrity and service orientation? That component is conveniently ignored.

Bad Ethics = Bad Advice = Disputes with Clients that end up in court. Mr. Solin had several quite sad case studies: Oscar & Esther wanted Bonds. Oscar is a former college president, age 80, on oxygen using a walker; he is completely risk averse and only wanted bonds in his portfolio. They went to a specialised bond house where their broker proceeded to place 80 percent of the portfolio in unrated bonds that had a 13 times greater default than investment grade. Oh yes, on paper the interest yield was much higher. The portfolio lost 40 percent of its value.

Lesson for any investor: Net worth = self-worth. The consequence for an investor who has lost money is hard; emotionally, the investor feels like a personal failure, and financially, there are fewer assets in the family purse. Said it before and said again, most investors spend more time planning their next vacation than they do on their personal financial future.

Should you buy this book? Perhaps, but you should find yourself a trusted, ethical professional investment advisor that you can trust and then, follow his/her advice ? not that of friends, neighbours, relatives, and acquaintances working in finance or any other industry.

@EDITRULE:

Martha Harris Myron CPA CFP? is a Bermudian, a Certified Financial Planner?(US license) practitioner and VP and Manager, Financial Planning at Bank of Bermuda. She holds a NASD Series 7 license, and formerly owned a US financial services practice.

Confidential Email can be directed to marthamyronnorthrock.bm

The article expresses the opinion of the author alone, and not necessarily that of Bank of Bermuda. Under no circumstances is this advice to be taken as a recommendation to buy or sell investment products or as a promotion for financial plans.