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LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
16464 posts

Metairie Financial Firm Having Suitability Issues
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Essentially, some investors are complaining that their money was placed in investments that were not suitable for them. Some of them seem to be very complex, and of course, they have lost money.

I often see clients who give me 1099s and brokerage statements, and some of the stuff they are invested in, is super complex. These are not multi-millionaires - these are retirees that have 500K in 401K assets that are being rolled into IRAs, and the IRA are investing in all sorts of derivative notes, private placements, etc.

I ask them if they understand what they are investing in, and they say no, that's why they pay an adviser.

I feel bad for them because many times they aren't financially savvy. And look, if the investments are doing great, no one is complaining. But you have to understand what you are invested in, even if someone else is calling the shots on your behalf.


OleWarSkuleAlum
Alabama Fan
Member since Dec 2013
6949 posts

re: Metairie Financial Firm Having Suitability Issues
Cue Jack Bogle.


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31
SippyCup
New Orleans Saints Fan
Member since Sep 2008
3078 posts

re: Metairie Financial Firm Having Suitability Issues
Did the firm have anything to gain by putting them in those risky investments or was it just carelessness by the firm?


OleWarSkuleAlum
Alabama Fan
Member since Dec 2013
6949 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

Did the firm have anything to gain by putting them in those risky investments or was it just carelessness by the firm?


They aren’t a fiduciary. It’s on the individual to protect themselves.


iknowmorethanyou
LSU Fan
Paydirt
Member since Jul 2007
6300 posts

re: Metairie Financial Firm Having Suitability Issues
$100 says these slapdick "advisors" don't know how the investments work either.


baldona
Auburn Fan
Florida
Member since Feb 2016
10000 posts

re: Metairie Financial Firm Having Suitability Issues
Its pretty much posted all over the internet and in every basic investing book that you should never invest in anything you don't understand.

The firm should get into trouble but I have absolutely 0 sympathy for someone that gives their money to someone else to "manage" and allows them to invest in something they are clueless about.


UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
563 posts

re: Metairie Financial Firm Having Suitability Issues
Yeah, those non-traded REIT's are a bad deal. The industry didn't figure that out until the financial crisis, but unfortunately it *still* hasn't been sorted out.

These stories really read like hit-pieces - leaving out important details like percentage of net worth invested in the REIT, when the money was invested, etc. Not saying the advisor didn't do anything wrong, but the firm should have had limits in place preventing the advisors from putting too much of any one client's net worth in a non-traded REIT, so they hold some liability too - probably why the article mentions they'll be defending it.

It really is unfortunate.


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30
UpstairsComputer
LSU Fan
Prairieville
Member since Jan 2017
563 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

$100 says these slapdick "advisors" don't know how the investments work either.


This. I'd bet $1000 they never read the entire prospectus.


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11
hungryone
LSU Fan
river parishes
Member since Sep 2010
9241 posts

re: Metairie Financial Firm Having Suitability Issues
Crap like this is exactly why practically everyone on this board loathes retail-variety so-called advisors. I get "let the buyer beware" as a general principle, but if a client is telling you he's risk averse & doesn't want to lose anything, aren't you morally/ethically obligated to steer him in that direction? I think so damn many of these jumped up salesmen are terribly unprofessional & see NO conflict in repeatedly referring their customers to shitty options.

FWIW, one of the advisors named in this article has a branch office on the side of the US highway in my little burg. I pass it regularly and am consistently amazed at the cost of the vehicles in the parking lot. Crazy expensive vehicles sit there there all day, so I assume (perhaps erroneously) they're not driven by customers.


OleWarSkuleAlum
Alabama Fan
Member since Dec 2013
6949 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

Crap like this is exactly why practically everyone on this board loathes retail-variety so-called advisors. I get "let the buyer beware" as a general principle, but if a client is telling you he's risk averse & doesn't want to lose anything, aren't you morally/ethically obligated to steer him in that direction? I think so damn many of these jumped up salesmen are terribly unprofessional & see NO conflict in repeatedly referring their customers to shitty options.


You can thank the GOP for killing the DOL fiduciary rule in March 2018. They did it solely because Obama supported it...

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iknowmorethanyou
LSU Fan
Paydirt
Member since Jul 2007
6300 posts

re: Metairie Financial Firm Having Suitability Issues
Yes, I'm sure they fraudulently completed suitability documents to get the investments approved.


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21
LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
16464 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

Did the firm have anything to gain by putting them in those risky investments or was it just carelessness by the firm?


Article states the advisers were getting pretty hefty commissions, possibly directly from the investments themselves. (So even if the advisers said they were fee-only, they were still getting commissions and not disclosing them).


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50
LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
16464 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

$100 says these slapdick "advisors" don't know how the investments work either.


From my experience, I can say you are very likely correct.

For example, I'll have a client get put into some of these really complex "linked basket" derivatives. They will ask me the tax consequences of these investments. Some of these investments, at first, I don't understand the inner workings of them (which affect how they are taxed). So I'll call their FA and ask for an explanation, and I get a bunch of hmmms and coughs and no real information.


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41
MMauler
Member since Jun 2013
9149 posts

re: Metairie Financial Firm Having Suitability Issues
quote:


They aren’t a fiduciary. It’s on the individual to protect themselves.


Apparently, not no mo!


From the article --

quote:

It was only in June that the Securities and Exchange Commission, which oversees FINRA, adopted a package of rules to protect regular investors after talking about it "for nearly two decades," as SEC Chairman Jay Clayton put it. The new rules explicitly say brokers and advisers now have to work in their clients' best interest rather than their own.



At the very least, it seems that these people would have some sort of fraudulent misrepresentation claims.

I also believe that these two shysters will be out of business REALLY soon.


hungryone
LSU Fan
river parishes
Member since Sep 2010
9241 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

I also believe that these two shysters will be out of business REALLY soon.

What's interesting to me: they appeared to target a specific type of investor--a retiree with a (relatively) modest pile of cash who had relatively low financial literacy. Looks like these were ppl who amassed the cash through 401K, while working in technical/industrial fields. IOW, precisely the sort of people who might not read every page of a prospectus.

Greed is a terrible thing.


KingBarkus
Mississippi St. Fan
New Orleans
Member since Nov 2009
3040 posts

re: Metairie Financial Firm Having Suitability Issues
I have a history with one of the subject's brothers. It involves thousands of dollars and Worldcom. I did have grounds to sue, and probably should have, but I shouldered all the blame. Scarred me.


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30
yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
6875 posts

re: Metairie Financial Firm Having Suitability Issues
Where was the compliance department in all of this?
They shoulder some responsibility as well as the FA.


Janky
LSU Fan
Team Primo
Member since Jun 2011
26489 posts

re: Metairie Financial Firm Having Suitability Issues
quote:

Where was the compliance department in all of this?


The B/D compliance department should have caught this if it is indeed what is alleged.


MMauler
Member since Jun 2013
9149 posts

re: Metairie Financial Firm Having Suitability Issues
Briseno -



Accardo -





I'm sorry, but these two look like complete f*cking scam artists.

I would bet that the end result of this investigation will be that these two shysters were getting huge kickbacks to put these retirees into these unstable REITs all the while insinuating to these poor saps that they were invested in AAA bonds.
This post was edited on 8/12 at 5:11 pm


Janky
LSU Fan
Team Primo
Member since Jun 2011
26489 posts

re: Metairie Financial Firm Having Suitability Issues
What do you mean kickbacks?


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