To Whom Do I Make the Check Payable?
Writing Checks Directly to Brokers & Financial Advisors
You are ready to invest with a broker or financial advisor and it’s
time to write the check. To whom should you make the check payable? Meyer
Wilson represents many investors who are victims of Ponzi schemes, broker
theft, and other types of investment fraud. Many of these cases share
a common thread: their broker or advisor asked the customer to make the
check payable to the advisor directly, or to a company that he or she owns.
When investing your money, do not under any circumstances make a check
payable directly to the individual broker, investment advisor, or his
or her company.
You should send your money to the institution that is going to take custody
of your money, rather than the salesperson who is selling you the investments.
Say, for example, “Jim Smith” is your broker and he works for
a large brokerage firm such as
Wells Fargo, or
UBS. Those firms serve as both your introducing broker and the custodian or
clearing broker. In that case, you would make checks payable to the brokerage
firm, because the brokerage firm is taking custody of your assets.
If Jim Smith is your broker and he works for a small, independent brokerage
firm, the process may be different. There are plenty of high quality brokers
working in well-respected, independent brokerage firms, but you need to
understand that if the brokerage firm is not acting as a clearing firm
or custodian of your assets, then you should only send money to the brokerage
clearing firm or custodian when investing money with that broker.
So, even if Jim Smith is conducting business as “Smith Financial,”
do not make the check payable directly to him or his company. If “Jim
Smith” is not a broker, but rather a registered investment advisor,
and you are working with his investment advisory firm, you will be making
the check payable to the clearing firm or custodian.
Common examples here include
Charles Schwab, Fidelity, and TD Ameritrade. Do not write a check to the investment advisor
or his or her firm directly. When sending money for an investment, the
bottom line is that you should always make the check payable to a large,
reputable institution that is taking custody of your assets.
You should spend some time researching the institution to make sure you
are sending your money to the appropriate place. If you have already written
a check directly to a broker or financial advisor and you suspect misconduct,
we encourage you to contact Meyer Wilson today to receive a
free review of your case.