Financial Advisor and Trust Fund

[SheitlQueen]

My sister is the trustee of my mother's estate which is in a trust which will be distributed in approximately 4-6 weeks. She received a phone call from the Edward Jones advisor who has been managing the account. He says there is approximately $160,000 in cash in the trust and suggested investing $100,000 of it into a bonds (JP Morgan and Black Rock) to earn interest even though we are close to a distribution.

I don't understand why he would suggest this-there would be so little money to be earned in such a short time frame, that the only thing I can think of is that he is looking to make some money on commissions. Does anyone know if either JP Morgan or Black Rock charge sales commissions? Why would the advisor suggest doing this?

 

[LOL!]

The advisor makes money by selling things. It is well known that Edward Jones is one of the worst places to keep investment assets because their fees are enormously high and their sales reps are ignorant enough to do damage to their clients unknowingly.

Bonds and bond funds can lose money, too.

 

[HadEnuff]

I think the suggestion is a last-ditch attempt to make a little money on the account before it is distributed out and likely no longer under his/her management anymore.

My dad's money was not with EJ, but once Dad died, and it was clear none of his heirs would be keeping their share under the management of his guy, he became a snippy pr!ck, and not particularly helpful to us in moving the investments out.

 

[frayne]

The advisor makes money by selling things. It is well known that Edward Jones is one of the worst places to keep investment assets because their fees are enormously high and their sales reps are ignorant enough to do damage to their clients unknowingly.

Bonds and bond funds can lose money, too.

Exactly !

 

[target2019]

I don't understand why he would suggest this-there would be so little money to be earned in such a short time frame, that the only thing I can think of is that he is looking to make some money on commissions. Does anyone know if either JP Morgan or Black Rock charge sales commissions? Why would the advisor suggest doing this?

Eddie's salesmen do what they do. I agree with others, don't take the bait. You'll probably regret it.

 

[pb4uski]

Just say no.

 

[LuckyDog]

My thought is that nobody cares more about your money than you. In many, many cases, FA's main goal is to make their money off of your money. It is as simple as that.

 

[Red Badger]

Sniff. Sniff, sniff. Sniff, sniff, sniff.

Something stinks. I think I smell fees.....



Edit - typos.

 

[CaliKid]

That's really too bad they are giving that advice. Maybe, and I stress maybe, if it was going to be held in trust a year or more but 4-6 weeks to go no way. Keep it in cash. As stated above I have also heard bad things about EJ advisors.

 

[MRG]

I'm guessing the Morgan stuff comes with a nice 1% deferred sales charge. The Jones organization doesn't care about your money, other than making your money theirs.

 

[OldShooter]

This money is not retirement money, which means that Eddie is not legally bound by the DOL fiduciary rule. Further, it is my understanding that their corporate policy is that they will act as fiduciaries only as legally required. So your FA is not a fiduciary in the context of this account.

I believe that it is the case, too, that both BlackRock and JPMorgan offer funds with front and/or back end loads and with 12b-1 fees. Ka-ching!

So, as has been pointed out, this bozo is trying to rip off your sister.

She should run, not walk, away from Eddie. If she needs an FA, she should seek out one who is legally a fiduciary. IOW, a Registered Investment Advisor or an Investment Advisor Representative. These are both legal terms and the enforcement has teeth. Belts-and-suspenders, I would insist on an FA who is Series 65 or Series 66 licensed. https://brokercheck.finra.org/ is your friend.

Note that Certified Financial Planners (CFPs) are not legally fiduciaries, despite some advertising claims to the contrary. It is not a bad credential to have, but it is sort of like the Good Housekeeping Seal of Approval, bestowed by a business and not backed by any laws or government regulations.

 

[Bryan Barnfellow]

I'd go further and say (half seriously) that your sister could be accused of dereliction of her fiduciary responsibility to the other heirs if she took him up on his kind offer.

-BB

 

[SheitlQueen]

Thanks all, you are backing up my thought that this smells funny and the guy is only looking out to make a few bucks before he is no longer in charge of the money. I sent her a text last night NOT to do it but wanted some back up....I'll send her the link to the forum and let her read the responses.

 

[ncbill]

as bb notes, another reason not to do anything is the personally liability the trustee faces in the event of any loss.

 

[SheitlQueen]

Thanks again all, my sister has called them and told them not to do anything with the money.
A separate question, when funds are distributed, is everything in the trust (around $2 million) that is not in cash get sold, and then the money is distributed? Or is it split into
five equal, separate accounts and then it is up to the heirs to decide what to do with things from then on?

 

[OldShooter]

Thanks again all, my sister has called them and told them not to do anything with the money.
A separate question, when funds are distributed, is everything in the trust (around $2 million) that is not in cash get sold, and then the money is distributed? Or is it split into
five equal, separate accounts and then it is up to the heirs to decide what to do with things from then on?

Unless the trust document specifies, it is up to the trustee. BUT ... I suggest that she consult with a tax-oriented CPA. There may be favorable or unfavorable tax consequences depending on the option she selects. I don't know, but SGOTI probably doesn't know for sure either.

 

[SheitlQueen]

Thanks Old Shooter!

 

[Dash man]

Thanks Old Shooter!

Make sure final income, Estate and inheritance taxes are paid before distributing the proceeds, along with any other bills and burial expenses. Once the money is distributed it’s hard to get back.

 

[SheitlQueen]

Make sure final income, Estate and inheritance taxes are paid before distributing the proceeds, along with any other bills and burial expenses. Once the money is distributed it’s hard to get back.

Yes, we were advised of that and all that will be dealt with before distribution. Plus some money will be held back for 2017 taxes.

 

[pb4uski]

Thanks again all, my sister has called them and told them not to do anything with the money.
A separate question, when funds are distributed, is everything in the trust (around $2 million) that is not in cash get sold, and then the money is distributed? Or is it split into
five equal, separate accounts and then it is up to the heirs to decide what to do with things from then on?

Typically, the trust assets will be sold and the proceeds (amounts retained to cover taxes on any gains) are distributed to the trust beneficiaries... but it doesn't have to be done that way if there were good reasons for doing so.

 

[RobbieB]

A will is usually part of the trust documents and that is where material property items can be bequeathed to individuals (the 57 Chevy goes to Hank)

Otherwise the financial assets can be sold and distributed as specified.