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Regulation and Compliance > Federal Regulation > FINRA

FINRA Alerts Investors to Aggressive Call Center Tactics

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Call Centers staffed by securities professionals are becoming increasingly common and often are “sales-oriented,” according to the Financial Industry Regulatory Authority, which issued an investor alert on them Thursday.

As broker-dealers move to push clients with accounts with less than $100,000-$250,000 in assets from working with live advisors to relying on call centers, the regulator says, some of these transfers may be happening “without prior customer consent.”

This can mean that investors no longer work with a specific advisor. Furthermore, 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,” FINRA says.

It lists the following potential concerns and urges investors to file online complaints with it via the FINRA’s Investor Complaint Center:

  • 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.

“Before agreeing to a mutual fund switch, use FINRA’s Fund Analyzer to compare expenses and fees,” the regulatory group said in a statement. The tool lets investors compare total fees and sales charges.

— Check out Reps Fired by Wells Fargo Asked to Call FINRA on ThinkAdvisor.


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