Role of Financial Consultant at Discount Brokerages

[livingalmostlarge]

my parents were fleeced by their broker at merrill lynch who then moved to raymond james. I was fortunate enough that this financial advisor finally retired, but the damage is excessive. We're talking they stole money from my parents, churned the account, bought 1 share of home depot, 1 share of apple to make money.

The stealing? Their broker from Merrill Lynch was kickec out of the SEC, fined, and sanctioned, but they "knew she was from a good family" so they went with her assistant who moved to Raymond James. She was "just looking out for them" and from "good family". So they have been paying her like $10k/year for the privilege of sitting in money market account losing money over the bull market of the last 10 years.

If my parents had literally dumped it into VOO/BND they would be so far ahead it's sad. That and if they hadn't had $100k stolen in 2013. I have the sheets in front of me and you can see the crazy trades, and they signed papers I found later that they wouldn't sue.

I also saw my in his "managed" ira account with whole life insurance. Yep whole life in an IRA. That is on top of the C shares of MF they had since 2002.

My mom has always told me that some of her friends wanted to work with these "shysters" but they didn't have enough money so it was fortunate they had so much. Yeah i wish they had never been gotten ahold of it. We'd have done better with CDs or just a money market.

 

[Imackenzie]

I have been meaning to ask this question for several weeks now but I just never got around to it. Then I received a voicemail message today from a new Schwab financial consultant telling me he was replacing my previous one who was no longer with Schwab.

I am pleased to be advised of the change. But although I wish the previous FC well, I guess I don't really care that he has left. My question is how people at a discount brokerage utilize their financial consultant (account rep?) and what exactly the financial consultant's role is.

I moved over to Schwab about 3 months ago basically to handle my investments myself and that is what I have done. I don't mean to sound like a know-it-all, but I haven't utilized the original FC very much beyond having him review my investments ahead of time to make sure everything could be transferred and to point me in the right direction a few times regarding navigating Schwab's website.

I was open to using the FC more and in the beginning I probably thought I would. But for most questions it was faster just to call an 800 number than to schedule an appointment with my FC for a week out. Gradually it seemed that the FC wasn't able to answer my questions but would always give me another phone number/person to contact directly. It always seems that appointments with people at Schwab were limited to 30-40 minutes. I get it; we are not paying commissions for trades so discount brokerages can't do a lot of hand holding. But for my larger questions, scheduling a meeting that would be limited to 30 minutes would simply be a waste of everyone's time from the get go. So I decided just to dive in and figure things out for myself (for better or worse).

I don't mean to be disrespectful, but what exactly is the role of the FC at a discount brokerage? At least in my situation, I increasingly got the impression that when I dealt with them it was like walking into a big box store when I am working on a project. You can ask the greeter at the front door or some employee in an aisle (if you can even find one, because often there are friendly employees in the aisles only in the commercials) where something is located in the store, and they can probably help you. But in most cases they can't (and maybe aren't supposed to) answer any questions beyond that (such as questions like "How do I fix this?").

I'm not heartbroken that my old FC has left by any means. He seemed like a friendly person. I did smile at times that he was a few years younger than my youngest child, so maybe late twenties. The new FC seems to be just a few years out of college. Again, I'm not a know-it-all by any means. I'm just curious and trying to understand better what these people are supposed to do. I haven't gotten any big sales pitches from them. But so far they seem to be a bit like a Walmart greeter, only they wear a shirt and tie (at least in their photos) and don't look scary like many Walmart greeters. I suppose I could/should ask them what their role is. But the bigger question would be how would they ever accomplish this when they limit appointments to 30 minutes.

They are not fiduciaried--they are b/d/ reps. Never take advice from these people.

 

[Mansderm]

Our brains get older

I have never used a planner for full management of of my investments. During the accumulation phase, I remained in control of 1/2 ( which was mainly dividend reinvestment accounts) and allowed a planner to manage other 1/2. His 1/2 included retirement accounts and a 401K for me and employees. I would comment to him "you're the pro, I am not, therefore you should beat my own managed investments. Most years, I did better, a few just as good, and few he did better. Those years gave me the confidence to continue managing my portfolio.

But now I'm in the spending phase, I am significantly older so I opted to move everything over to Vanguard and I use their low cost management fee for about 40% of my assets. They allowed direct transfer of individual stocks and I still manage my brokerage account. I think he's too conservative; he thinks I'm too risky. And that's why I did it. My brain is older. The reason elderly get taken advantage of is that as our brains age, our assessment of risk changes. Or, with gradual degeneration, we just don't see the whole picture as easily. I'm doing everything I can to protect my brain, but I can't escape the fact that every year, it gets older.

So I explained this to my advisor. And explained that should I call him and want to do something "crazy", please call my son and let him know. I explained situations that I would consider "crazy" . This doesn't protect what I manage, but it does prevent a total wipe out in the event my sons wouldn't notice before getting to the managed funds. And I explained this to my sons and what to do should they become concerned about my spending.

 

[FLJim]

I have been with Schwab for over 45 years. I remember those days when you needed a landline telephone to call and place the buy & sell orders. Commissions were around $29.95 back then, maybe higher. Now we do it all online and commission-free, mostly. I have a FC whose mission is to add value to my relationship with Schwab. End result for Schwab would be keeping money at Schwab, growing it, and maintaing/inacreasing client satisfaction. I have always been DIY, so I have never met with my FC, but communicate occasionally via email.