According to a ThinkAdvisor article from last week, the Financial Industry Regulatory Authority (FINRA) has put out a warning to investors regarding call centers. Typically staffed by securities professionals, these centers are “sales-oriented” and use aggressive tactics to sell securities and investments to unsuspecting investors. Many investors with smaller accounts ($100,000 to $250,000) are being pushed into call centers instead of relying on a live advisor. FINRA stated that the compensation structure for some call centers “creates incentives for center brokers to sell certain investment products or to bring in new money to existing accounts.” These are the concerns FINRA reported:
Aggressive sales tactics that can differ from the prior client interactions
Failure to gather client suitability information
IRA rollovers presented as “free” or involving “no fees”
Mutual fund switches that may not be suitable for investors
Misrepresentations and omissions of key information, such as the name of the fund being recommended, expense ratios and sales charges
Failure to disclose information of different share classes and associated expenses
Inadequate supervision of call center representatives.