Protecting your rights.

Learn about how to protect your rights as an investor. 


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Charles Schwab Stock Losses

The Charles Schwab Corporation was founded in 1971. Originally, the company was named First Commander Corporation. Two years into its existence, the company changed its name to the one it currently has: the Charles Schwab Corporation. This name came from the founder and principle stockholder of the company at the time, Charles R. Schwab. 


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5 Reasons Investors Should Think Twice About Owning Bond Funds

Kyros Law Offices represents investors that have suffered losses due to broker misconduct. Beyond helping investors recover from investment losses, Kyros Law Offices also tries to warn investors of potential harm before it occurs. One area for potential investment losses involves bond fund investments. Here are five reasons why investors should think twice about owning bond funds:

 

1.     Interest rate risk

2.     Credit risk

3.     Redemption risk

4.     Ongoing management fees

5.     Uncertainty regarding what bonds or debt the fund owns.

 

If you have suffered losses of $100,000 or more in your bond fund investments, please call one of our securities attorneys to discuss your rights. 1-800-934-2921

Variable Annuities

Variable annuities are one of the most confusing investment products for investors to understand. Most variable annuities are sold to investors on a solicited basis, meaning that the broker brings the investment idea to the investor. As a result, investors often rely heavily upon the broker that is recommending the variable annuity for information regarding the risks, material terms, and costs and fees associated with variable annuities.

Industry standards require brokers to understand and discuss these important factors with investors. In addition, a broker can only recommend variable annuities if it is suitable for the investor’s investment goals, needs, and risk tolerance.

What investors often fail to realize is that variable annuities are one highest paying commission products for brokers. Brokers can earn an up-front 6-7% commission, plus trailing commissions each year. Not only does the broker get paid handsomely for the sale, but the insurance company and investment managers also are paid well. Depending on the type of variable annuity, investors can pay approximately 3% per year for management fees, insurance fees, and additional rider provisions. Investors often fail to understand that these costs can have a dramatic impact on investment performance. Many times a variable annuity is a better investment for the broker to sell than for the investor to purchase. For example, if an investor purchases a $500,000 variable annuity with income rider provisions, the broker will likely earn an up-front commission of $35,000. In addition, the yearly costs of maintaining the variable annuities can cost an investor $15,000 per year. A 55 year old investor may pay $150,000 in costs before the income rider provision of the annuity can be exercised. Beyond the high fees and costs, investors also need to be aware that variable annuities are highly illiquid investments with substantial penalties for early withdrawals. As a result, variable annuities may not be suitable for investors with short-term investment and income needs.

Investors should also be aware of the bonus and guarantee features of annuities. Brokers will try and use a bonus feature in a new annuity they are pitching to offset the penalties an investor will incur by switching from one annuity to another. This practice is designed to generate additional commissions for the broker with little benefit to the investor. In addition, brokers will sell variable annuities to investors seeking guaranteed income. First, the income is not a guarantee like a treasury bond or a CD. The guarantee depends upon the credit risk of the issuing insurance company. Second, the guaranteed income stream often requires the investor to annuitize their investments, which essentially means that investors are forgoing their right to the principal in exchange for the income. Investors pay a yearly fee for income rider features, which can be substantial over the life of the annuity. Investors can purchase traditional fixed income for a fraction of the fees and commissions of a variable annuity without the prohibitive withdrawal penalties and without forgoing the principal investment in exchange for an income stream.

Lost money because of your stockbroker?

We will fight to help you get your money back. If you have lost over $100,000 due to stockbroker fraud, contact us to protect your rights. Complete the form on this page or call 1-800-934-2921 for a free no obligation consultation with a lawyer. We work on a contingency basis, so rest assured that there will never be an out of pocket expense to you.