By Hugh Anderson
Recently the Securities and Exchange Commission (SEC) slapped a financial advisory firm with a $200,000 fine over undisclosed trading costs to clients. The upshot? Clients of the firm were charged fees in addition to the usual all-in-one fee also known as “wrap” charges and weren’t told about it.
In a wrap program, investments are overseen by third-party portfolio managers who are guided by the investment strategies of the client. Clients pay an annual wrap fee for advisory, brokerage, and custodial services. The fee is generally based on a percentage of client assets under management, usually ranging from 1 percent to 3 percent.
The firm that got dinged by the SEC was charging a wrap fee but also got caught billing clients for certain trading and transaction expenses, including trades through broker-dealers, that were not part of the wrap program. This would have been fine if the additional expenses had been openly disclosed to the client. They weren’t.
Here at HighTower Las Vegas, such a situation would never occur. We act as a fiduciary agent for every client, meaning we must act in his/her best interest, free of conflict, including disclosing any and all costs outside of our standard fee. Core Principle #2 at HighTower Las Vegas is “Honesty & Transparency” in everything we do.
When it comes to investing, we believe the highest level of trust and confidence must exist between an advisor and a client. If you don’t know what your investment expenses are, now’s the time to ask.
HighTower Las Vegas is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.
This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.
All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.
This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.