Tags: Zweig | happiness | letter | broker

WSJ's Zweig: 'Happiness Letter' from Your Broker May Bring You Unhappiness

By    |   Sunday, 09 November 2014 07:29 PM

If you're one of those people who immediately throws away notices from your brokerage firm, you might want to think twice around this time of year.

Brokerages often send out what are known as "happiness letters" during this period, explains Wall Street Journal columnist Jason Zweig.

"Such letters go out because the firm’s internal monitoring software has detected activity that could be harmful to a client and could lead to arbitration claims or regulatory penalties," Zweig writes.

"Lawyers and former brokers say the mailings tend to be considerably more common in the fourth quarter, when brokers are driven to hit commission targets and their managers are trying to earn bonuses."

If you throw away or sign and return the letter as requested, you may damage your chances for restitution if there is wrongdoing.

"If you receive such a letter, immediately search your account for signs of activity that seem inappropriate or counter to your instructions to your broker," Zweig says. "Call the compliance officer or branch manager who sent the letter and politely insist on seeing the internal data that prompted it."

Unsavory brokers use a variety of means to ensnare victims. Financial adviser Roger of Asset Strategy Consultants in Arlington Heights, Ill., writing in U.S. News & World Report, offers several tips for avoiding dishonest brokers.

  • "Insist on a third-party custodian. If a financial adviser suggests that you don’t need to house your investments with a third-party custodian such as Schwab, Fidelity, your bank, etc. I suggest that you run.
  • "Read and review your account statements on a regular basis.
  • "Don’t invest in what you don’t understand."
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If you're one of those people who immediatelythrows away notices from your brokerage firm, you might want to thinktwice around this time of year. Brokerages often send out what are known as happiness letters during this period, explains Wall Street Journalcolumnist Jason...
Zweig, happiness, letter, broker
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2014-29-09
Sunday, 09 November 2014 07:29 PM
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