Gaslowitz Frankel Partner Robert Port recently joined investment strategist and advisor Steve Pomeranz on the Steve Pomeranz Radio Show to discuss how to identify financial fraud and broker malpractice.
The radio show, which aired on Feb. 22, highlighted information Mr. Port wrote in a recent article published on the website HumbleDollar that outlines lessons learned from representing investors who have suffered losses due to the negligence or misconduct of their stockbroker, investment advisor, or insurance agent. The interview began with Mr. Port’s observation that the movements of the stock market – just like all other future events – are unpredictable. Mr. Port observed that because of this unpredictability, it is impossible for brokers, fund managers, or financial newsletters to time market movements and consistently beat market averages over long periods of time.
Mr. Port also noted that he pays special attention to clients when he hears the phrase “investment product” or “investment vehicle” because of his extensive experience working with investors who have gotten entangled in these usually expensive and underperforming investment strategies. Some examples of investment products that can be abused are limited partnerships, real estate investments, investment trusts, variable annuities, and mortgage-backed securities.
Further, when separating the good advisers from the bad ones, Mr. Port shared with Mr. Pomeranz that he has come to believe that advisors who work based on a “fee only” basis—as opposed to being paid commissions—do provide a legitimate and needed service. “Fee only” advisors charge a percentage fee based on the value of the assets placed with them for investment. Advisors with integrity are sensitive to the possibility that fees and expenses will, compounded over time, have a large impact on their client’s wealth. Mr. Port added that he uses a financial advisor because he believes that it is likely that an independent fee only advisor, who acts objectively and without the emotion that often drives investment decisions, will to do a better job than he could in managing his investment portfolio.
Mr. Port has decades of experience in handling commercial litigation and fiduciary disputes, including securities litigation and arbitration representing clients who have lost money resulting from the misconduct of their investment advisors, insurance agents, and stockbrokers.
Listen to the radio interview in its entirety here.