As a financial analyst and writer, I’d like to walk you through my take on a significant brokerage firm, Sigma Financial Corporation (CRD #: 14303), based in Ann Arbor, Michigan. With both Sigma Financial Corporation and Sigma Planning Corporation under its umbrella, the company, linked to Parkland, supports about 900 professionals. Many of these professionals, in addition to being investment advisors, are qualified to offer life insurance and annuities.
What Sigma Financial Corporation Brings to the Table
I’ve found that Sigma Financial Corporation doesn’t just stop at allowing for the buying and selling of mainstream stocks and bonds. They extend their portfolio to more niche and sometimes riskier financial products. If you’re looking for personalized advice, Sigma brokers can offer that, as well as carry out your trading instructions. It’s important for customers to know that when choosing Sigma, they can opt for investment advice, brokerage services, or a blend of both—each path comes with its own cost structure.
A Closer Look at Brokerage Account Fees
I appreciate Sigma’s straightforwardness when it comes to fees. As an investor, expect to be informed about transaction fees, costs to open and maintain an account, closing charges, and any penalties for early withdrawal. They’re pretty upfront about the internal costs and fees of various funds, too. But a word of caution: some of the products come with surrender charges, so it’s crucial to get the full picture before committing.
Understanding Potential Conflicts of Interest
While Sigma is transparent about its fees, that same transparency reveals some conflicts of interest. Brokers profiting from transaction fees could result in excessive trading. Additionally, Sigma’s earnings from commissions for insurance and mutual funds might incentivize the promotion of certain products over others. It’s a classic dilemma in our industry, as warned by Benjamin Franklin: “There cannot be good living where there is not good drinking”—or in our case, good advising where there is not uncompromised incentive.
Staying Under the Watchful Eye of Regulators
It may not come as a surprise that Sigma Financial Corporation and some of its advisors have been spotlighted for questionable practices, marking up 15 regulatory events and 11 arbitration incidents on their detailed BrokerCheck record.
In 2020, for instance, Sigma was accused by the New York State Department of Financial Services of mistakenly providing information needed for its life broker license application. These included undisclosed participant roles in various legal proceedings that involved accusations of breach of duty and misrepresentation. Moreover, they’ve faced penalties from both FINRA and state regulators for various infractions.
Concerning certain unsuitable investment products, Sigma was also fined in an incident involving non-traditional ETFs for not maintaining a system to supervise their sale, which amounted to a $100,000 penalty after a settlement with FINRA.
And let’s not overlook the 2016 episode where Sigma agreed to pay a similar $100,000 fine for neglecting to apply sales charge discounts to qualified Unit Investment Trust (UIT) purchases, consequently costing their clients over $92,000.
When Bad Advice Leads to Losses
Seeing your investment shrink because of an advisor’s actions—or inactions—can be heartbreaking. It underscores the necessity of obtaining professional legal advice in securities to possibly claw back some of these losses. It reminds me of an unnerving financial fact: Bad financial advisors cost Americans millions in lost retirement savings every year. So, staying well-advised is crucial to fending off unnecessary financial loss and ensuring peace of mind.
