Friday, November 27, 2015

Clause - not Santa - in IRA agreement has investor concerned


DEAR HARRY: I am considering changing my IRA to another broker. In reading the Master Advisory Account Agreement, I came across a Pre-dispute Arbitration Clause that has me deeply concerned. It requires that all disputes be settled by arbitration with some industry organization, and that I give up my right to go to court.

My financial planner said this is a standard type of clause that virtually all brokers use. However, we know of people who have been hurt by financial institutions. I am reluctant to sign this agreement. I don't remember having to sign one for any previous associations. Am I right?

WHAT HARRY SAYS: Your planner is correct that such clauses are boilerplate for most brokers. You can cross out that clause and initial it, but I have strong doubts that they will accept that change.

However, my experience with such arbitration has been good. In the cases I was involved in, I felt that they reached a fair result. If you do run into a problem, arbitration will be less costly to you than a case going to court. I have no difficulty in suggesting that you sign without attempting to change the clause. That's what I have done.


Email Harry Gross at, or

write to him at Daily News, 801 Market St., Philadelphia, PA 19107. Harry urges all his readers to give blood. Contact the American Red Cross at 800-Red Cross.

Daily News Personal Finance Columnist
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