Do not blindly rely on regulators!

Investors are advised not to blindly rely on the fact that a financial services firm is regulated by some official institution such as the SEC in the USA or the FSA in the United Kingdom.While these two organisations may have somewhat sharper teeth than their mostly tame equivalents in other jurisdictions it does not mean that being regulated by them is an official seal of approval. The same can be said for any diploma, membership in a professional organisation or academic or other qualification the financial adviser may exhibit. One could even say that the more these are put into the foreground the more suspicious any potential customer should become as it may be a promotional tactic that is intended to impress and put wool over the eyes of the prospective client. Large organisations such as the 'universal' banks may appear to be safe at first glance but in their case they may trade too much on the belief that they are too large to fail. While they may indeed be safer in a moment of crisis that should not divert anyone from closely analysing their performance record.