As more cutting-edge investment products enter the marketplace, there’s growing fear retail investors and professional brokers are getting in over their heads.
"This is classic Warren Buffett. If you don't understand it, you can't invest in it. And, that's what's happening here," he said."The first line of defense here is the broker-dealer. The broker-dealer is supposed to have policies and procedures in place that say this is how you teach people about this stuff. This is what this stuff is. And in the cases the SEC brought, those weren't being followed.
Main Management CEO Kim Arthur highlights the wide availability of alternative investments on trading platforms as problematic. His firm caters to institutional clients and high net worth individuals. "We do use complex products, mostly options. And, they're mostly covered call options. So, the big difference with that is you're using that to dampen volatility. Create another stream of income or hedge against larger swings," said Arthur in the same segment."In the meantime, you just continue to do increased education alongside the regulation," noted Arthur.
"[It] could have a pretty chilling effect on the sales of those products and investor portfolios," Nadig said in the same segment."These are really powerful tools that investors have come to rely on."
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