​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 Merrill Lynch, 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.