Financial Advisor Transparency: Will it Benefit You?

By Jack Waymire, President & CEO, Paladin Registry on Wednesday, March 21st, 2012

Let’s start with a three-part definition.

Part I: Advisors who practice transparency provide accurate information to investors when they sell investment advice and services. The most important information documents the professionals’ education, experience, certifications, compliance record, fiduciary status, compensation, and services.

Part II: Transparency is synonymous with full disclosure. Advisors who practice transparency do not withhold any information that would impact investor decisions when they buy what financial professionals are selling.

Part III: The information is voluntary. Investors do not have to ask the right questions or go to FINRA BrokerCheck to obtain advisor information. Advisors make the process for obtaining information easy for investors.

It is pretty obvious from the three-part definition that only high quality advisors can afford to practice full transparency because they have nothing to hide. Lower quality advisors will practice partial transparency or non-transparency.

Advisors who practice partial transparency only provide information that helps them sell financial products. For example, they tout a certification that they bought or earned, but they neglect to disclose limited investment experience. Investors have no idea key information is being deliberately withheld by the advisors.

Even riskier are advisors who practice non-transparency. They use personalities and sales skills to develop relationships with investors and sell them financial products. They may also use three deceptive sales practices to win new clients: Misrepresentation, Omission, and Exaggeration. Investors select these advisors for the wrong reasons.

FINRA is currently soliciting comments that would make BrokerCheck more investor-friendly. Right now, less than 5% of investors use this service to check the compliance record of investors. Financial advisor transparency will improve if FINRA implements some of the ideas that are submitted to it. However, there is no guarantee investors will use the improved service.

There is a good chance FINRA will make limited improvements that show they are trying, but stop short of major enhancements because Wall Street does not want full transparency. Companies fear investors would not buy what they are selling if they had easy access to complete information about sales representatives. Wall Street will fight any form of transparency that negatively impacts revenue, profit, and executive bonuses.

High quality advisors will have to be proactive to thrive in a transparent world. For example, the advisors should develop a one-page handout that provides all of the information that investors need to select them. Then provide investors with blank versions of the form and suggest they obtain the same information from other advisors they are interviewing.

Better yet, go to, a website I founded, and subscribe to its Directory service. Watchdog is an independent third party that has a process for gathering information from advisors and delivering it to investors in easy-to-read reports. Watchdog also provides free tools that investors can use to evaluate any advisor at any U.S. firm. These services create a level playing field for investors and competitive advantage for higher quality advisors.

Jack Waymire spent 28 years in the financial services industry. For 21 of those years he was the president of a Registered Investment Advisory firm that licensed more then 300 professionals and served more than 50,000 investors. He left the industry in 2004 to market his book, Who’s Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor that was published by John Wiley. He also launched his first website in 2004,, that featured key content from his book and a service that profiled more than 300 pre-screened financial professionals. In excess of one million investors have used the information, tips, and services on this website. In 2008, he founded a second website,, that provides free tools investors use to select and monitor all types of financial professionals. Waymire is a columnist for Worth magazine, frequently quoted in the media, and a regular contributor to major blog sites.

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