Nightmare Proposal!

[Callie]

My husband and I have been using a FP via ameriprise and we were very happy with her and the results. Then he accepted a job with a large financial services company that starts with "F". The terms of his employment were that we have to move all of our money inside that company and trade from there (insider trading concerns).

So as an employee we qualify for totally free services, including that we can buy any funds we want with no loads or exit fees, no transaction fees, etc. Even Vanguard funds. LOL

They had a team of advisors put a proposal together for us. (we have in excess of 1.5M with everything included) And it is TERRIBLE! 28 funds! 65% in Large growth or value. And if you really want a laugh look at these awful funds they included

OAKMX, MFOCX, SBLGX, USGLX, PCRRX, MIQBX, CIVVX

We are both shocked.

So we will be doing it ourselves, many of you will be happy to hear that. ;-)

I have been looking at various sample portfolios so will work from there and post something for all of you to look at and comment.

Why would they recommend such bad funds? Incompetence or something else?

 

[FinanceDude]

My husband and I have been using a FP via ameriprise and we were very happy with her and the results. Then he accepted a job with a large financial services company that starts with "F". The terms of his employment were that we have to move all of our money inside that company and trade from there (insider trading concerns).

So as an employee we qualify for totally free services, including that we can buy any funds we want with no loads or exit fees, no transaction fees, etc. Even Vanguard funds. LOL

They had a team of advisors put a proposal together for us. (we have in excess of 1.5M with everything included) And it is TERRIBLE! 28 funds! 65% in Large growth or value. And if you really want a laugh look at these awful funds they included

OAKMX, MFOCX, SBLGX, USGLX, PCRRX, MIQBX, CIVVX

We are both shocked.

So we will be doing it ourselves, many of you will be happy to hear that. ;-)

I have been looking at various sample portfolios so will work from there and post something for all of you to look at and comment.

Why would they recommend such bad funds? Incompetence or something else?

Team of advisors or customer service reps?

 

[Olav23]

Probably some type of revenue sharing deal. If you wanted to stick with the FP, I don't see why you couldn't give them an "investment philosophy" that they have to stick to for your account. Like, I want only index funds, no more than X asset classes or funds, etc. If they are not willing to agree to your plan, then, move on. But, if you need that level of comfort of having an FP, no reason to not get what you pay for.

 

[Callie]

We are also considering hiring a for-fee planner just to review out stuff. That seems like a better fit. There is no way we will use their services now. Although it is nice to be able to trade almost anything with no fees.

I didn't realize there are revenue sharing deals with other funds, but that makes sense. It seems like a breach of fiduciary duty to recommend some of those funds. One of them is 2 star. Just terrible. One has a loss this year so far, etc.

 

[Callie]

Out of 28 funds, only 4 were theirs! They must me on commission for those terrible ones.

 

[Webzter]

If you like your current FP, why not see if they're comfortable doing fee-based and sticking to your available options?

 

[Callie]

Yes, we are going to talk to her. I know she was disappointed in losing us as clients.

 

[NinjaPigeon]

Am I reading that correctly? Your DH's new employment agreement required that he move your assets to the company?

Is that even enforceable?

 

[Callie]

Yes, they don't control them, they just want to see them. We cannot even open a brokerage account somewhere else without telling them. It's to make sure there are no insider trading issues. It is not unusual.

 

[bssc]

28 funds sounds like a bit much.

Makes sense that F wants him to keep his money where they can see it, especially if he is around sensitive information.

 

[wmackey]

Vanguard has similar rules as well. If you work for them all investments must be through their service. That way they can monitor for insider trading.

 

[Webzter]

If I worked for one of our other companies, I would need a letter from the VP of compliance stating that it was ok for me to open a brokerage account at any brokerage other than ours.

 

[Texas Proud]

Yes, they don't control them, they just want to see them. We cannot even open a brokerage account somewhere else without telling them. It's to make sure there are no insider trading issues. It is not unusual.

When I had a job that they wanted to keep track... all I had to do was have a second statement sent to the company control group... I did not have to change brokerage firms... It seems strange they would make you move your money..

 

[CyclingInvestor]

My last job was at a company that provided various stock trading services. We
had to keep all brokerage accounts at a designated brokerage (although they did
not care about mutual funds). Since we could see customers orders before they
were executed, Compliance needed to make sure we did not trade based on that
info.

 

[Callie]

We don't have an issue with this, they waive all fees.

 

[Olav23]

Same here. I work at a broker dealer, and they want duplicate statements, but don't force us to be in any specific brokerage. They also have some type of holding requirement for single stocks, and anything related to options are a no-no.