Fines Triple As FINRA Focuses On Suitability

Fines imposed on the financial services industry more than tripled last year to $18.3 million from $5.6 million in 2015, according to FINRA Suitability Sanctions Statistics.

The increase in penalty fees has some advisors blaming the Department of Labor’s looming fiduciary standard, although two cases were responsible for a large percentage of the total.

Consensus among financial advisors is that there should be no more than 50 percent of a person’s retirement account in an annuity unless the client absolutely insists on more however as the boomer population has been aging, more of them are being exposed to alternative investments and a heavy concentration of annuities.

“Advisors that are haphazardly accumulating clients and assets and then plowing them into broad catchment portfolios cannot claim to really be considering the suitability of each of these investments for each client,” said Min Zhang, a chartered financial analyst and former vice president of Asset Allocation Product Management at PIMCO.

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