Financial advisors are spending a lot of time these days fulfilling new
compliance requirements, but Bruce Sankin-an arbitrator/mediator for
the NASD-feels advisors are ignoring possibly the best place to learn
about compliance: an arbitration proceeding.
"Every one of them should be required, at least every two years, to observe an arbitration proceeding," Sankin says. "If they observe an arbitration, they would be a lot more cautious about what they do."
What many advisors fail to realize, he says, is that shady dealers aren't the only ones pulled into arbitration proceedings. Well-meaning advisors can also be the subject of hearings if they're not careful.
"Financial advisors can do everything right, but that doesn't mean a claimant attorney won't try to find a gray area," Sankin says.
Sankin is the author of "What All Stock and Mutual Fund Investors Should Know!" an educational manual that he says is designed for both investors and advisors.
The full edition of his book, which is available at www.investorsrights.com, also goes into detail about arbitration and mediation proceedings, including the types of documentation that can help or hurt an advisor's case.
"One of the benefits for financial advisors is that it helps them see the way clients see things," he says.