Another unethical financial advice that can be given by financial advisors to their clients is to encourage them to sell their funds such as unit trusts so as to get extra commission. Through this, the clients are convinced that it is a quick way of earning commission from their investments but in ends up with such detrimental effects on the client’s side that they may end up loosing their savings and other assets. On the other hand, the unethical financial advisor ends up getting the top cream and gains more from the transaction.
Unethical financial advisors who want to make more money for themselves use the ignorant and the old people to carry out their mission. These financiers who are mostly in the banking sector urge the old people to invest in long term or risky investments which may end up benefiting the financiers instead of the clients and since financiers know that the old people are asset rich and income poor, they sell irrelevant financial products to them by creating new security documentations such as reverse mortgages and sell the product to the elderly hence putting the old persons at risk due to the uncertain future needs which are required by the old.
There are various methods available for the elderly and other targeted people in the society which they can use to protect themselves against abusive investment advising practices. One of the methods is by taking custody of his/her money. The elderly should never allow their financial advisors to take custody or gain access to their finances regardless of how good or trustworthy they may be. This is because the advisor can misuse the money including taking it to his/her account or using it to make his own investments.
The elderly should therefore never put total financial trust to his advisor rather he should put it in brokerage firms or in insurance companies. The elderly should ensure that his financial advisor follow his wishes and keeps him informed of any up comings which are concerned with financial matters. The financier can offer investment advice to the person but if the elderly does not like it, the financier should then put the money where the owner wants it and not try to manipulate him into taking his/her investment option.
If the person finds out that his/her financial advisor has been buying and selling his investments without his/her knowledge and approval, he/she should seek legal complaint immediately and terminate his relationship with such an advisor. Alternatively, the elder may have certain feelings that the financial advisor has cheated and carried out unethical deals behind his/her back, when there are such suspicions, the person should seek help from securities lawyers who will determine whether the accusations made by the property owner are true or false.
The person can also seek arbitration which involves hiring an attorney to represent him/her during the arbitration; the person can as well represent himself. Arbitration is a way of seeking justice outside the courts by use of an imperial adjudicator whose decision becomes final and binding. Advantages of this method are that it is cheap and fast, it is private and flexible than the courts and its rewards are easier to enforce. (Fisher & Shelly, 2002).
The elderly can also protect themselves against Abusive Investment Advising Practices by requesting their banks and financial institutions to monitor their bank accounts. This method helps to detect any transactions of unusually large amounts of money or an unusual pattern of transactions that may be taking place. The bank on detecting such cases is then required to raise concerns to the accounts owner over the possibility of a fraud case.