financial planning

CBP requires broker information on importers

By Mark Davenport 14 July, 2023 3 mins read

Brokers are people who help buyers and sellers by arranging transactions on a fee basis. When the deal is completed, the broker acts as a principal party. The outcome of the deal determines whether or not the broker earns a commission. If the broker acts both as the buyer or seller, the broker becomes the principal party.

BrokerCheck.com by FINRA

BrokerCheck, a free service of the Financial Industry Regulatory Authority (FINRA), is available. Investors can access the website to verify the background of a broker or report a broker for investigation to the securities regulators. BrokerCheck also has information on brokers who are registered and still working in the securities business. Important to remember that not all broker activities are indicative of wrongdoing. BrokerCheck also contains events that have been reported to the securities regulators from brokers and firms.

BrokerCheck does not include information regarding non-investment-related civil litigation or protective orders. It does not include information regarding criminal convictions or theft or breaching of trust, except if it is investment-related. BrokerCheck can help you make an informed decision on whether or not to work with that broker.

Proposed rule by CBP

The proposed rule is designed to ensure that brokers comply with CBP directives and report any violations. It is also intended to ensure that brokers have all the documentation and records they need to support their decisions. Brokers will be required to notify their clients if they are unable to comply, make errors, or fail to do so, and take appropriate action, if necessary.

Proposed rules require that brokers collect all necessary information to make decisions about an import client. This could eliminate the practice known as broker shopping. Potential importers are forced to shop around for the best broker.

Importers do not verify their clients' identities

CBP estimates that 51% of importers have not verified the identities of clients. Another 59% do not have any or minimal information about clients. This can be an indication that importers do not wish to be checked thoroughly, or that they may be planning to commit fraud. The importer should ask themselves if they would like to have their business checked thoroughly by a customs broker.

Currently, the government estimates that importers spend 95,000 hours a year gathering information about their clients. This includes verifying each client's identity. Brokers must verify the identities of each importer that they represent. This can take up to 2 hours per POA.

Brokers do not want importers to share additional information

Because of a variety factors, importers won't share more information with their broker. It makes the broker's job harder and presents more risk. It also puts brokers at a disadvantage in the eyes fraudsters by requiring them verify importer information. This puts brokers at an unfair disadvantage and makes it easier to import illegally manufactured goods.

Brokers who verify identity of clients incur additional expenses. Brokers who do so risk losing customers to those who don't require additional information. This new rule would end this incentive, and also eliminate the incentive for "brokershop". This would ultimately be good for the trade community as it will help reduce identity theft, stop counterfeit imports, and increase enforcement of AD/CVD laws. This would also be beneficial to the American public as it will reduce the risk of unsafe goods entering our country.

Verification of client's identity costs

A critical strategy to avoid fraud and make sure customers are authentic is verifying a client's identity. This is especially important to financial institutions. According to Know Your Customer (KYC) regulations, all financial institutions and investment-broker dealers must do due diligence on their customers. This involves obtaining customer credentials and evaluating their risk profiles. In some instances, the process can be as simple as a short video of a customer.

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FAQ

How old should I start wealth management?

The best time to start Wealth Management is when you are young enough to enjoy the fruits of your labor but not too young to have lost touch with reality.

You will make more money if you start investing sooner than you think.

If you are thinking of having children, it may be a good idea to start early.

If you wait until later in life, you may find yourself living off savings for the rest of your life.

How to Beat Inflation by Savings

Inflation refers to the increase in prices for goods and services caused by increases in demand and decreases of supply. Since the Industrial Revolution, when people started saving money, inflation was a problem. Inflation is controlled by the government through raising interest rates and printing new currency. There are other ways to combat inflation, but you don't have to spend your money.

For example, you could invest in foreign countries where inflation isn’t as high. You can also invest in precious metals. Silver and gold are both examples of "real" investments, as their prices go up despite the dollar dropping. Investors who are concerned by inflation should also consider precious metals.

What are the various types of investments that can be used for wealth building?

There are many types of investments that can be used to build wealth. These are just a few examples.

Stocks & Bonds
Mutual Funds
Real Estate
Gold
Other Assets

Each has its own advantages and disadvantages. For example, stocks and bonds are easy to understand and manage. They can fluctuate in price over time and need active management. On the other hand, real estate tends to hold its value better than other assets such as gold and mutual funds.

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Once you have chosen the asset you wish to invest, you are able to move on and speak to a financial advisor or wealth manager to find the right one.

Statistics

These rates generally reside somewhere around 1% of AUM annually, though rates usually drop as you invest more with the firm. (yahoo.com)
According to Indeed, the average salary for a wealth manager in the United States in 2022 was $79,395.6 (investopedia.com)
If you are working with a private firm owned by an advisor, any advisory fees (generally around 1%) would go to the advisor. (nerdwallet.com)
As previously mentioned, according to a 2017 study, stocks were found to be a highly successful investment, with the rate of return averaging around seven percent. (fortunebuilders.com)