Pennsylvania Investment Observer

Investor's Bill of Rights

by Daniel J. Nestlerode

About ten years ago, the Republican minority, under the leadership of Newt Gingrich, cobbled together the "Contract with America". As a result, Republicans took control of Congress and have never relinquished it back to the Democrats. While you might be in favor of this outcome, or opposed to it, you certainly cannot deny the effectiveness of the original proposal. The contract said here's what we are going to do if you elect us to office. I recall at the time that I was very excited that finally politicians would actually be held accountable and that something might actually happen! Whether you love it or hate it, I'm ready for another contract with America.

Not to be left too far behind, the Securities Industry Association (SIA) recently adopted an Investors Bill of Rights. The three page document outlines generically what investors should expect from their financial professionals and what investment firms should be reasonably able to expect from their clients. Different from the Privacy Policy and from the disclosures that are required because of the Patriot Act, this voluntary program is being promoted to enhance the credibility of the investment industry. And while many of the policies in the bill of rights are standard operating procedures (or should be), many investors, unaware of how the industry functions, will find that this document will help shed a little light into the workings of Wall Street. The SIA is hoping to have over a hundred investment firms adopt their Investor Bill of Rights, or a similar document, by this fall and bring some standards to investor-broker relationships.

At Nestlerode Co., Inc., we have reviewed and adapted the SIA's Investors Bill of Rights to our operation and we are in the process of approving this new policy. Sometime in July we will be posting our own version of the Investors Bill of Rights to our web site as well as mailing it to all of our clients in the later half of the year. No matter who you deal with, you should ask your investment professional about their Investor Bill of Rights and when they will provide you with the document.

Working with an investment professional is a matter of building a fully disclosed trusting relationship. This Investors Bill of Rights is a move in the right direction for both investment professionals & their firms and individual investors.

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