Avantax Investment Services

Avantax Investment Services (CRD #: 13686) has employed a long list of brokers with misconduct allegations on their records. Investors should know about this brokerage firm’s conflicts of interest, regulatory actions, and fees before signing up for an investment account.

If you lost money working with an Avantax Investment Services broker, Kurta Law can help.

Avantax Background Information

Avantax Investment Services has its headquarters in Dallas, Texas.

It has done business under the following names:

• 1^st Global
• HD Vest Investment Services
• HD Vest
• Avantax Wealth Management

Avantax Investment Services Investment Products

Avantax Investment Services executes brokerage services through its clearing firm, National Financial Services (NFS). NFS also provides margin loans, which come with significant risks for investors.

• Mutual Funds
• Stocks
• Bonds
• Exchange-Traded Funds (ETFs)
• Unit Investment Trusts (UITs)
• Options
• Alternative Investments
• Variable Annuities

Fees and Commissions

Avantax Investment Services discloses the following fees and commissions in its Customer Relationship Summary (Form CRS).

• Avantax Investment Services earns a fee every time you place a trade or execute a new transaction. This may be referred to as a commission, a sales charge, or a markup.
• Certain products come with internal fees. These products include mutual funds, ETFs, alternative investments, and variable annuities.
• Your financial professional may sell insurance products, such as annuities, through affiliated insurance agencies – Avantax Insurance Services and Avantax Insurance Agency. These products come with commissions, giving Avantax brokers a financial incentive to recommend insurance products sold through their affiliates.

There are also the following account fees:

• Annual account fees
• Operations and service fees
• Wire fees
• Account termination fees

Investors also note that brokerage account fees may differ from retirement account fees.

More Conflicts of Interest

Financial professionals may earn non-cash incentives from certain product sponsors, including paid attendance to educational conferences and meetings, recognition trips, or direct compensation such as higher payouts if they reach certain revenue production levels.

Advisory Account Services

Advisory accounts have separate fees from brokerage firms. With an advisory account, you pay a percentage of the total assets in your account. Investors pay these fees even if their advisor does not place any trades in their account.

Brokers with Disciplinary Histories

Kurta Law is aware of the following brokers with misconduct allegations on their records. These brokers have registered with Avantax Investment Services.

• Mark Bloom allegedly recommended unsuitable investments.
• Davin Carey also allegedly recommended unsuitable investments.
• Monica Osborne was the subject of a six-figure suitability dispute.
• Sandeep Varma allegedly recommended unsuitable investments and has a regulatory action on his BrokerCheck record.
• Peter Maniscalco has faced allegations of an unsuitable mutual fund for a 401K account.
• Chris Kirkland has multiple six-figure suitability disputes on his record.
• Kevin Kelly also has multiple six-figure suitability disputes on his record.
• Archibald Michael allegedly recommended unsuitable alternative investments.
• Mark Bushkin is the subject of a suitability dispute.
• John Rood has a dispute on his record alleging unprofessional conduct and overcharging fees.
• Steven Katzenstein has multiple investor allegations on his record, including a suitability dispute.
• Larry Ware allegedly offered unsuitable investment recommendations.
• Brian Glaze allegedly recommended unsuitable structured products.
• David Test allegedly forged client initials and falsified client documents between February and March 2021.
• Saul Rothberger allegedly executed an unsuitable investment strategy.
• Jeffrey Freeman also allegedly recommended an unsuitable investment strategy.
• David Monheit allegedly misappropriated a client’s funds.

Regulatory Actions

Avantax Investment Services has the following regulatory actions and fines on its records.

Maine Office of Securities Fined Avantax Investment Services $5,000

On August 24, 2023, the State of Maine Office of Securities alleged that Avantax Investment Services failed to conduct on-site branch inspections of all Maine branch offices before December 31, 2022. The firm agreed to pay a civil fine of $5,000.

$60,000 Fine from the Vermont Department of Financial Regulation

According to Allegations filed on September 13, 2022, the Vermont Department of Financial Regulation alleged that Avantax Investment Services failed to implement a reasonable supervision system over one of its agents, in violation of FINRA Rule 3110. During a 2018 audit, the firm allegedly failed to identify the agent’s outside business activity.

FINRA Rule 3270 requires firms to review their brokers’ outside business activities.

Avantax Investment Services imposed a fine of $60,000.

Alleged Failure to Apply for Sales Charge Waivers 

On November 15, 2016, FINRA alleged that Avantax Investment Services failed to sell discounted shares of Class A mutual funds to eligible customers, specifically retirement plan and charitable organization customers. When a customer owns Class A mutual fund shares, they can purchase more of the same class without paying sales charges. Instead, FINRA alleges that certain Avantax customers purchased Class A shares with no discounts or Class B shares or Class C shares, which feature back-end sales charges and overall higher fees and expenses.

FINRA further alleged that Avantax Investment Services failed to adopt controls to detect instances when the firm failed to provide sales-charge waivers.

As a result, Avantax Investment Services customers allegedly collectively overpaid for mutual fund shares by $219,930.

Alleged Failure to Report Written Customer Complaints

Avantax Investment Services allegedly failed to update financial disclosures for its representatives, including bankruptcies. Additionally, the firm allegedly failed to report written customer complaints. The firm principals allegedly approved at least 18 variable annuity transactions without verifying their suitability. The firm allegedly failed to provide appropriate guidance to help brokers verify suitability.

Kurta Law Can Help

Contact Kurta Law today for a free case evaluation: (877) 600-0098 or info@kurtlawfirm.com. Kurta Law has extensive experience holding brokerage firms responsible for failures to supervise their brokers and failures to detect securities rule violations. Our attorneys do not collect a fee unless you win your case.