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Message
Financial Advisor Problems
Posted on 10/5/09 at 9:23 am
Posted on 10/5/09 at 9:23 am
My wife and I have a financial advisor that about 6 months ago, she gave him a check for her yearly contribution. He told us that he'd talk to our accountant and they'd come up with the best place to invest it (Roth IRA, SEP, SIMPLE, etc). We didn't think anything else about it, until we looked at the statements a few weeks ago, and the money never got invested. When we contacted him about it, he finally owned up to it and admitted that "It may have gone under the radar and been kinda forgotten." What kind, if any recourse is there for us?
This isn't the first time he's messed something up for us, but the last time it happened it worked out for the better, so we didn't really get that upset about it. And we're not talking about huge amounts of money (under $10,000), but in 6 months, we may have missed out on that money growing by anywhere from 10-30%.
Any thoughts and/or advice? Besides getting a new financial advisor- that's a given.
This isn't the first time he's messed something up for us, but the last time it happened it worked out for the better, so we didn't really get that upset about it. And we're not talking about huge amounts of money (under $10,000), but in 6 months, we may have missed out on that money growing by anywhere from 10-30%.
Any thoughts and/or advice? Besides getting a new financial advisor- that's a given.
5
Posted on 10/5/09 at 9:28 am to LSUGUMBO
That sucks. As you said, you've lost at least 25% over the past 6 months.
If I were you, I'd send him a letter (best to get it all in writing now) recapping his error and then demanding he make you whole. Ask for something reasonable, like 30%.
Then fire him.....
If I were you, I'd send him a letter (best to get it all in writing now) recapping his error and then demanding he make you whole. Ask for something reasonable, like 30%.
Then fire him.....
Posted on 10/5/09 at 9:35 am to LSURussian
quote:
If I were you, I'd send him a letter (best to get it all in writing now) recapping his error and then demanding he make you whole. Ask for something reasonable, like 30%.
That's what we were thinking as well. My wife's meeting with him right now (it's actually her money), and I think that's what she's going to ask for.
He's definitely going to get fired- now we just have to start the process of finding a new one, which will be a different thread probably. Our current advisor is a family friend who handles many of my parents investments, and we had never had any problems with him. He just can't seem to do ANYTHING right with our investments.
Posted on 10/5/09 at 9:38 am to LSUGUMBO
What kind of fees is this clown charging you? I'd at least demand he refund all of them back to you.
And the fact that his first gaffe worked to your favor shouldn't be part of this. He has fricked up twice.
And for the love of god man, don't write someone a big check and wait 6 months to find out where your money is.
And the fact that his first gaffe worked to your favor shouldn't be part of this. He has fricked up twice.
And for the love of god man, don't write someone a big check and wait 6 months to find out where your money is.
Posted on 10/5/09 at 9:39 am to LSUGUMBO
It might help you to threaten to report him with whatever body registers such financial advisors with all of the associated bad publicity he would receive from that. However, if you do, he would probably no longer be a "family friend" so you'll have to decide which is more important. Good luck.
Posted on 10/5/09 at 9:58 am to LSURussian
Sounds like he's running a Madoff Scheme.
Posted on 10/5/09 at 9:58 am to lsufanintexas
Possibly.
This post was edited on 10/5/09 at 9:59 am
Posted on 10/5/09 at 10:08 am to LSURussian
I don't think he's running a Madoff scheme, but then again I don't really know a whole lot about it. The money we gave him was in a Money Market account that's attached to my investments, so I knew where the money was in my account, I just never paid enough attention to see that it wasn't building anything. And I knew that it wasn't going to be invested immediately since he had to talk to our accountant, and in the end it got lost in the shuffle on our end, as well as his. It's not a good situation in general.
Posted on 10/5/09 at 11:03 am to LSUGUMBO
A Madoff scheme happened right there in Shreveport in the 1980s. Can't remember the guy's name but his wife was the principal of Southwood HS. He went to prison but the old folks whose money he stole never got it back. Some had to go back to work at age 70.
I'm not a big believer in financial advisors. I have an accountant and if there's something I'm unsure of I ask his opinion. He doesn't charge extra.
I'm not a big believer in financial advisors. I have an accountant and if there's something I'm unsure of I ask his opinion. He doesn't charge extra.
Posted on 10/5/09 at 11:28 am to LSUGUMBO
quote:
I don't think he's running a Madoff scheme, but then again I don't really know a whole lot about it. The money we gave him was in a Money Market account that's attached to my investments, so I knew where the money was in my account, I just never paid enough attention to see that it wasn't building anything. And I knew that it wasn't going to be invested immediately since he had to talk to our accountant, and in the end it got lost in the shuffle on our end, as well as his. It's not a good situation in general.
Your advisor was definitely napping on that one, but this is yet another example of why investors using advisors should follow up everything they instruct someone to do continuously until it has been completed satisfactorily. My sisters lost a lot of money working with a broker who regularly failed to act on their instructions, I would have sued him. I would never advocate using a commissioned broker as an advisor, they don't have any fiduciary duties to the client.
Posted on 10/5/09 at 11:35 am to LSUGUMBO
When mistakes happen and the advisor is at fault, you can be made whole.
On the check you will have the date that you gave it to him.
I know that you gave him permission to discuss with your accountant on where to invest (which begs the question why your accountant is giving your investment guy investment advice) but this can be handled at worst in 1 - 2 business days if you have a phone tag type situation.
I would ask what investment would he have recommended and demand the he back date the trade to the date on the check, or to be truly fair one or two days thereafter.
If he says he cannot do this he is lying. Every broker dealer has the ability to back date a trade. He may not want to admit to this capability because when this happens the market loss is charged to the broker.
Good luck
On the check you will have the date that you gave it to him.
I know that you gave him permission to discuss with your accountant on where to invest (which begs the question why your accountant is giving your investment guy investment advice) but this can be handled at worst in 1 - 2 business days if you have a phone tag type situation.
I would ask what investment would he have recommended and demand the he back date the trade to the date on the check, or to be truly fair one or two days thereafter.
If he says he cannot do this he is lying. Every broker dealer has the ability to back date a trade. He may not want to admit to this capability because when this happens the market loss is charged to the broker.
Good luck
Posted on 10/5/09 at 11:56 am to amsterdam
The whole concept of a financial advisor seems bogus.
This is my concept of a financial advisor.
"Ummm yeah Mr. Sucker, give me your money and I'll pick the stocks, bonds, funds, etc. to put that money in and hope it gives you a return...btw, my fee is 5% of whatever you are putting into the stocks,bonds, & funds I chose for ya. One more thing mr. sucker, Don't blame me if the stocks, bonds, and funds I pick don't give you a return. If you do, thank you come again..Next Please!"
This is my concept of a financial advisor.
"Ummm yeah Mr. Sucker, give me your money and I'll pick the stocks, bonds, funds, etc. to put that money in and hope it gives you a return...btw, my fee is 5% of whatever you are putting into the stocks,bonds, & funds I chose for ya. One more thing mr. sucker, Don't blame me if the stocks, bonds, and funds I pick don't give you a return. If you do, thank you come again..Next Please!"
Posted on 10/5/09 at 12:25 pm to lsufanintexas
I am not an advisor. I do think there are good advisors out there, more likely fee only planners, but the potential client would need to know almost as much or more as a good planner in order to qualify whether the advisor understands financial markets history, tax aspects of investing, protecting assets, etc ad nauseaum. If the client is in a knowledgeable position why use an advisor?
If people want to look at a guy who runs conservative funds look at John Hussman, but he isn't an advisor, he is a fund manager. Most retail investors could do a lot worse than Harry Browne's Permanent Portfolio in which he advocated 25% each in stock, Treasuries, cash, and gold and rebalance to maintain the proportions. Investors would have lost very little in this portfolio during the meltdown. Investing doesn't have to be complicated and I personally see zero need to pay for an advisor.
If people want to look at a guy who runs conservative funds look at John Hussman, but he isn't an advisor, he is a fund manager. Most retail investors could do a lot worse than Harry Browne's Permanent Portfolio in which he advocated 25% each in stock, Treasuries, cash, and gold and rebalance to maintain the proportions. Investors would have lost very little in this portfolio during the meltdown. Investing doesn't have to be complicated and I personally see zero need to pay for an advisor.
Posted on 10/5/09 at 12:29 pm to lsufanintexas
quote:
This is my concept of a financial advisor.
"Ummm yeah Mr. Sucker, give me your money and I'll pick the stocks, bonds, funds, etc. to put that money in and hope it gives you a return...btw, my fee is 5% of whatever you are putting into the stocks,bonds, & funds I chose for ya. One more thing mr. sucker, Don't blame me if the stocks, bonds, and funds I pick don't give you a return. If you do, thank you come again..Next Please!"
Dang it. Who let you spy in on our training sessions. That is EXACTLY how it works. Hope all my sucker clients dont catch to the fact that they are paying something for nothing.
Posted on 10/5/09 at 12:31 pm to tirebiter
quote:
I am not an advisor. I do think there are good advisors out there
Agreed
quote:
the potential client would need to know almost as much or more as a good planner in order to qualify whether the advisor understands financial markets history, tax aspects of investing, protecting assets, etc ad nauseaum
Not true. I beleive you can make an informed decision on an advisor without being a financial guru
Posted on 10/5/09 at 12:32 pm to amsterdam
quote:
I know that you gave him permission to discuss with your accountant on where to invest (which begs the question why your accountant is giving your investment guy investment advice) but this can be handled at worst in 1 - 2 business days if you have a phone tag type situation.
The only reason he was talking to my accountant was to decide what type of account to set up (Roth, SEP, SIMPLE, etc) for tax purposes. Since my wife and I are both self employed, there are several options, so he just wanted to have a conversation about it to make sure the account was going to be best.
quote:
I would ask what investment would he have recommended and demand the he back date the trade to the date on the check, or to be truly fair one or two days thereafter.
This is something we're looking in to.
Posted on 10/5/09 at 2:23 pm to LSUGUMBO
quote:
The only reason he was talking to my accountant was to decide what type of account to set up (Roth, SEP, SIMPLE, etc) for tax purposes. Since my wife and I are both self employed, there are several options, so he just wanted to have a conversation about it to make sure the account was going to be best.
You and your wife should have had the conversation with your accountant before you gave the financial advisor any money. Your accountant should have been advising you of the tax implications of the retirement plan options available to you.
Your financial advisor definitely screwed up failing to invest your money for six months, which likely means the retirement acocunt wasn't created either. In which case you may have missed a tax year's deduction since some retirement accounts must be set up, and the annual contribution made, prior to the filing of your tax return.
If I were you I'd be looking for a new accountant as well as a new inancial advisor.
Posted on 10/5/09 at 2:32 pm to Poodlebrain
"I would never advocate using a commissioned broker as an advisor, they don't have any fiduciary duties to the client."
This statement is wrong some advisor/firms due take a fiduciary duty to their client and get it in writing. This is a "must approach" to begin narrowing down who to work with
I would say everyone involved dropped the ball beginning with advisor/acct. and yourself. Especially given you state you have had problems before - what would make you think you shouldn't follow up? Not saying your at fault and clearly they dropped the ball, but use your senses. Especially when beginning a relationship you should be fully involved in the process and hopefully at least looking at your accounts???
Also, most advisor's can't place trades discretionary (so they would need your confirmation upon trade)...so not sure all details but one would think he would of had another meeting to go over which investments are suitable for you risk tolerance once the IRA, etc. was set up and what you are looking to accomplish (tax standpoint) as I would hope he would not blindly place trades
Regardless it seems the whole situation was a mess and hopefully a learning experience to never give your money until you understand the investment/tax consequence and how it benefits your family
This statement is wrong some advisor/firms due take a fiduciary duty to their client and get it in writing. This is a "must approach" to begin narrowing down who to work with
I would say everyone involved dropped the ball beginning with advisor/acct. and yourself. Especially given you state you have had problems before - what would make you think you shouldn't follow up? Not saying your at fault and clearly they dropped the ball, but use your senses. Especially when beginning a relationship you should be fully involved in the process and hopefully at least looking at your accounts???
Also, most advisor's can't place trades discretionary (so they would need your confirmation upon trade)...so not sure all details but one would think he would of had another meeting to go over which investments are suitable for you risk tolerance once the IRA, etc. was set up and what you are looking to accomplish (tax standpoint) as I would hope he would not blindly place trades
Regardless it seems the whole situation was a mess and hopefully a learning experience to never give your money until you understand the investment/tax consequence and how it benefits your family
This post was edited on 10/5/09 at 2:37 pm
Posted on 10/5/09 at 2:42 pm to ManiaTiger
quote:
Regardless it seems the whole situation was a mess and hopefully a learning experience to never give your money until you understand the investment/tax consequence and how it benefits your family
We, along with everyone else involved, definitely dropped the ball on this one, and it has certainly been a learning experience on many levels. Now, having to start from square 1 and finding a new advisor will be another experience in itself. Thanks for all the information and advice, and I'm sure I'll be back for more as the process proceeds.
Posted on 10/5/09 at 8:06 pm to LSUGUMBO
quote:
We, along with everyone else involved, definitely dropped the ball on this one
I couldnt disagree more. I do not think the client should take a scotch of the blame. You gave your advisor a job to do and he dropped the ball. The rule in my office is you do not get second chances when it comes to someone else's money. You should expect your advisor to follow thru with whatever job you give him.
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