A lot can go wrong when a person entrust their money to a licensed broker. People counting on their life savings and retirement plan tend to be unhappy when things go south in the financial market.
Whether it is losing thousands to stocks or watching property investments turn sour losing money is a bitter pill to swallow. Everyone understands the market to be volatile, but when human error comes in to play it can be harder to bear.
There are countless stories of people being cheated out of their retirement fund or 401k because of the mishandling of accounts. To protect the public and to discourage poor practice the state statute will require a sales finance bond to show compliance with state regulations for a licensed broker.
Before a person can obtain their licensed broker license they must first post a surety bond. The sales finance bond financially covers the actions of the seller while protecting those who also enter into business with the seller. This helps the broker should they be accused of misconduct and helps the buyer who believes they have been wronged.
A sales of finance bond is a court accepted guarantee for the licensed broker’s work. Brokers who work with a firm may have this bond handled through their employer.
Regardless of if a broker works for themselves or for a firm the requirement stands. There is no way to waiver the state’s requirement for a licensed broker to have a sales finance bond.
Each state has established their guidelines for a licensed broker with the hopes of curbing illegal and financially harmful actions. This is why licensing exist in the first place, to help out weed out and track bad apples.
Anyone considering using a licensed broker should always check that this measure is in place and that they have met all their state’s expectations. People who want to work as a licensed broker must expect that the state takes their position very seriously and will not accept an excuse as to why the sales finance bond is not in place before their first day.