Final Meeting With My Finacial Advisor.

[brewer12345]

In my case I just think that we should have choice a FA more wisely since my DW and I felt that it was in poor taste for FA to say at our final meeting, that "I made a lot of money off of both of you, and I mean a lot, and I'll be honest, I'm sorry to see you guys want to go to another institution". Can you imagine how we felt.

Holy cow! I cannot even express how inappropriate that is!

 

[justin]

In my case I just think that we should have choice a FA more wisely since my DW and I felt that it was in poor taste for FA to say at our final meeting, that "I made a lot of money off of both of you, and I mean a lot, and I'll be honest, I'm sorry to see you guys want to go to another institution". Can you imagine how we felt.

The first honest thing to come out of this guy's mouth...

 

[FinanceDude]

Too funny - I hadn't thought of it that way.

Your comment brought to the front of my mind something I've been pondering about the whole FA business. I'm not bashing folks in the business, but I can't help but think that at some of the big places there aren't some similarities between that business and the new car business. In that I mean that the sales guy/FA is a trained front for a giant machine that loves to make customers happy...but...it's all about the profit.

Your comment on the picture reminded me of a comment I read in a book about the new car business that said the one person who gets worked over by the business worse than the customer is the sales person. He/She is forced to work a selling system that maximizes profits for the dealeship while minimizing those annoying little costs like sale commissions. In effect, the sales person could be the most honest and decent person around, but he's working in a system that is doing it's damndest to squeeze money out of every deal.

Not quite the same........speaking from someone who has done both..........

 

[Leonidas]

Not quite the same........speaking from someone who has done both..........

Hmmmm..,okay, but when you say not quite the same that makes me think that there are some similarities. I know you're sensitive to bashing FA's and that's not what I'm doing (although I'm sure there are some crooks and incompetents), it's just that I'm saying that there must be some institutional pressures placed on people to sell stuff so the company can make more profits.

Leonidas Thanks for the detailed and easy to follow explanation. That was great and I will agree with everything except the paragraph above. Although it was close, I did more than just tell them what I wanted with a credit card and left. I gave them my measurements and constant feedback saying, I'm not happy since they don't fit the measurements I gave you.
In reality, We gave my FA our exact goals, and not only followed through on what was expected of us finacially, we more than exceded it. And when I told FA that I wasn't happy,and even went as far as to say that I was putting FA on "porbation, nothing and I mean nothing changed.

On a different note, my wife received a call yesterday during dinner from a lawyer saying he was requested to call us from our FA since he stated we wanted a will. After completing the call my DW looked over to me in dissapointment, saying, I don't thing our FA really hears what we're saying. We told him 4 times during the last meeting that we didn't want life insurance, and that we already had a will.

In my case I just think that we should have choice a FA more wisely since my DW and I felt that it was in poor taste for FA to say at our final meeting, that "I made a lot of money off of both of you, and I mean a lot, and I'll be honest, I'm sorry to see you guys want to go to another institution". Can you imagine how we felt.

Thanks for the additional details. Then I guess, modifying the analogy to fit that info, it was more of a case that the salesguy kept dragging you over to the zebra striped suits when you wanted something conservative to wear to the office. If that happened to you I'm sure you wouldn't spend all day with the same sales person. After a couple of tries to get the person to understand what you want, you would have eventually walked out the door or demanded to see the manager.

I remember a psych class in college during which we discussed a test used by a car dealership to evaluate people who applied to sales positions. It was a multiple choice test that was designed to primarily measure how motivated the applicant was to make money. The dealership knew that if it paid its sales force on commission that those salespeople who were more motivated to make money would find the only way to do it was to maximize profit in every transaction. There's nothing wrong with a business wanting to make money, but all consumers need to understand that and know that they are dealing with people who have a basic conflict between servicing the customer and making money off the customer. You have to know the difference between what is the right thing for you to buy and a different deal in which the salesperson sees more profit for him/her and the company.

All I'm trying to point out to you is that you weren't born with the knowledge of how to buy suits, or cars, or groceries...or investment products. You may not be the most sophisticated shopper, but you can roughly evaluate how well those products fill your needs, how well the salesfolks treat you, and, although you may not drive the hardest bargain, you can tell the difference between a great deal and a total ripoff. Invest in yourself first - make the effort to learn the basics so you can make a somewhat informed decision and know when you're getting blatantly ripped off.

Holy cow! I cannot even express how inappropriate that is!

Yeah...I would be hard pressed to keep myself from inviting that guy to step outside where we could settle our differences in a different forum.

 

[Retire Soon]

This thread calls to mind the moment when I was inspired to learn as much as I possibly could about personal investment. On "Black Monday", October 19, 1987 the Dow Jones Industrial Average lost 22% in one single horrifying day. We can all recall the sad stories of people who lost much more than 22% during this ugly event. After reading about those unfortunate accounts of what happened to the porfolios of countless people, I made up my mind that I would learn as much as I could about investing in the stock market. I became very tired of people complaining about what their financial advisors did wrong, or what poor recommendations had been made by the people they so dearly trusted. Speaking for myself, I choose to be personally responsible for my own investments.

 

[F M All]

Speaking for myself, I choose to be personally responsible for my own investments.

Yes, but the problem seems to be that the industry lacks some fundamental controls. Many intelligent folks have had bad experiences with FA/FPs, and then have seen the light and taken control. How many not so intelligent people are just being fleeced because they don't have the ability to see the light?
I don't propose an answer because the discussion will come down to another philosophical left/right, Republican/Democrat, Capitalist/Socialist, American/European argument. Maybe if these people are too foolish or dim to take the time or trouble to protect themselves then they deserve their punishment.
I do find it interesting though that so many Americans scream "price gouging" as soon as a shortage arises e.g gas in 2006. What constitutes excessive charging in the Finance industry?

 

[My Dream]

If I may go off topic for a sec, I wanted to ask what the term "Ph.D" beside my advisors name and "Consultant" underneath means? I always thought Ph.D meant doctorate. Please tell me that's not so in this case. Sorry for the sarcasm.

MD

 

[brewer12345]

If I may go off topic for a sec, I wanted to ask what the term "Ph.D" beside my advisors name and "Consultant" underneath means? I always thought Ph.D meant doctorate. Please tell me that's not so in this case. Sorry for the sarcasm.

MD

Ph.D = Piled Higher & Deeper

Consultant = Con + Insult the client

Sorry, couldn't resist.

Rule #1: letters after someone's name and titles mean nothing if the person is still an idiot or a crook.

 

[FinanceDude]

Hmmmm..,okay, but when you say not quite the same that makes me think that there are some similarities. I know you're sensitive to bashing FA's and that's not what I'm doing (although I'm sure there are some crooks and incompetents), it's just that I'm saying that there must be some institutional pressures placed on people to sell stuff so the company can make more profits.

I will add this....they BOTH involve using inexperienced people to make money. In the beginning, new advisors HAVE to make money. I beleive THESE folks are the ones that a number of folks on here had unfortunate experiences with. I remember an advisor I worked with telling me he sold NOTHING but B shares his first 3 years in the business, because "you can't help them in the future if you're not around"...............

There is LOADS of pressure on car salesman and new brokers alike. I managed 20 salespeople at one dealership. You are right in stating that the salesperson gets treated WORSE than the customer. It was hard, but I found a way to turn that around so my people trusted me, because they knew I was there to help them. I took the flak from the GM and the owner, and because we got big results they ended up leaving me alone. But I learned a lot.

There is a real temptation in the beginning to make as much as you can per client, so you can pay your bills. Unfortunately, I run into other folks that never get past that, even after they are successful................. It's one of the flaws in the system that the industry isn't going to mandate any change about. As far as my story, I refused to do it that way, even though it cost me quite a bit of income initially. My dad used to tell me that the only thing to make sure I never sold was my integrity. Many folks on here will say that I did that because I was/am in two industries that both get bad raps. However, I feel otherwise, which is why I continue to try to make a difference in my field, and with my clients. The day I feel I can't, I will switch industries or retire........which is what happened in the auto industry, and in retrospect was good timing.

 

[mickeyd]

"Ph.D"

?

Public HighSchool Diploma

 

[bongo2]

My next step is to transfer the funds from IG to TD Waterhouse, I was told by TD Waterhouse that if I choice to transfer in kind, than I have to pay, up to $2000. in fees by TD Waterhouse for the paperwork. If I chose to close out the funds at IG then I stand to pay taxes on 10 years of interest, but save on the $2000. in paperwork that TD would have to do.

I want to reiterate someone else's comment that this doesn't make sense. First, I have transfered accounts in kind to TDAmeritrade with no fees, so there must be something strange about your account that is causing these high expenses. Second, if you haven't had any gains I don't see how there can be any taxes to pay. Either way, probably better to choke down the $2k now than pay a hidden 4% forever.

 

[My Dream]

I want to reiterate someone else's comment that this doesn't make sense. First, I have transfered accounts in kind to TDAmeritrade with no fees, so there must be something strange about your account that is causing these high expenses.

What's the difference between TDAmeritrade and TDWaterhouse?

As for the fees, this is a direct quote from TDW. "If you transfer the Non-Registered account in kind (meaning you do not sell the funds) then when we sell in January you will still incur the redemption charges plus the $45 per fund fee that TD charges. If you wait until January and sell the funds at Investors then bring the cash, you will only pay the redemption charges and not the $45 fee per fund."

"The $45 per fund charge is a TD charge, as redeeming Investors Group funds is a manual process for TD. The only reason we discussed bringing the non-registered account to TD in kind (not selling the funds) was to defer the capital gains until 2007"

The redemption fees are what IG charges since I never left the last bit of money in for the full term.

Second, if you haven't had any gains I don't see how there can be any taxes to pay. Either way, probably better to choke down the $2k now than pay a hidden 4% forever.

I stated earlier that I was averaging approximately 1% per year for 6 years and during the last 4 when I decided to invest on my own, I was getting up to 5% more. Keep in mind that this is over a 10 year period with an amount just over $1,000,000.00. Interest from IG amounts close to $100,000.00 and again, even the last 4 years with IG were more then 1%. I hope this answers your question.

 

[bongo2]

TDWaterhouse merged with Ameritrade and changed their name to TDAmeritrade. It would appear (from the small print at the bottom of their webpage) that the Canadian piece is still called TDWaterhouse, but both are owned by the same parent.

If you are paying $45 per fund, then to get to $2k are you in 40+ funds?

It sounds like you will pay the redemption charges and taxes either way. Since it is now 2007 you might as well just send over the cash.

If your total gain is about 10%, and you are going to be saving 2-4% of fees every year, then those taxes (totaling maybe 5%?) will pay for themselves quickly. One possibility would be if you are going to retire soon and be in a much lower tax bracket, so that your 100k in gains would be basically untaxed next year, then it might be worthwhile to wait. Even then, though, it might be psychologically better to make sure no more money goes to your current advisor.

 

[Moemg]

Paid to hijack dummies !

 

[spideyrdpd]

The problem is using a finacial advisor vs a financial planner.
Do advisors need to have any creditials any specific education ?
As far as I know they often just need to have either a broker license to sell stocks or mutual funds or maybe an insurance lic.

Rather than buy books set aside a day at the library or barnes and noble and sit and find a book that fits your reading style. Best to print one of the lists so as to not waste time on books that may not be as good.
For most here the bottom line is to diversify into the index funds.

Being that he has money that he is moving. Wouldnt he be better off in some etf's and then later focus on funds ?

 

[bssc]

Of course, this thread brings to mind the book, "Where are the Customers' Yachts?"

My Dream, I think that the FA's comment on making a lot of money off you was an indication that you are doing the right thing. Good luck.

 

[My Dream]

TDWaterhouse merged with Ameritrade and changed their name to TDAmeritrade. It would appear (from the small print at the bottom of their webpage) that the Canadian piece is still called TDWaterhouse, but both are owned by the same parent.

That makes total sense, thanks

If you are paying $45 per fund, then to get to $2k are you in 40+ funds?

I believe it adds up to approximatly 34 funds

It sounds like you will pay the redemption charges and taxes either way. Since it is now 2007 you might as well just send over the cash.

If your total gain is about 10%, and you are going to be saving 2-4% of fees every year, then those taxes (totaling maybe 5%?) will pay for themselves quickly. One possibility would be if you are going to retire soon and be in a much lower tax bracket, so that your 100k in gains would be basically untaxed next year, then it might be worthwhile to wait. Even then, though, it might be psychologically better to make sure no more money goes to your current advisor.

There are 3 Possible things I have to pay.

1. Defered Service Charges.............IG
2. Capital Gains or $45 per fund charge ............Taxes or TDW


I retired 3 months ago, I didn't think I could get away with that much capital gains and not pay tax this year.

Thanks

 

[clifp]

34 Funds!, I am amazed and sadden. Why they would put you in 34 funds to begin with is simply astounding. FYI, My Dreams 34 stocks is considered a reasonable well diversified portfolio. There is simply no need for more than 10 funds at the most, and a very stong case can be made for owning no more than 2-5 funds period.

I don't know for sure but you may have some grounds for suing the IG group.

The basic problem for your transfering is that like many funds sold by Financial advisors, your funds can only be bought and sold via a network of financial advisors. Discount brokers aren't part of this network. (The performance of the funds is the other problem, but I think this has been discussed a lot)


At a 15% capital gains rate, the taxes will be painful but not hideous.
You menitioned that ISG has redemption charges. Given the horrible performance and advice you have been given I'd scream like mad about paying any redemption charges on funds, unless you explicited oked the purchase of that particular fund by your financial advisor.

I am going through a similar thing with transfering money from my mother former financial advisor. Actually, they have been pretty good at giving us the money and transfering it to Schwab.

Best of luck.

 

[My Dream]

34 Funds!, I am amazed and sadden. Why they would put you in 34 funds to begin with is simply astounding. FYI, My Dreams 34 stocks is considered a reasonable well diversified portfolio. There is simply no need for more than 10 funds at the most, and a very stong case can be made for owning no more than 2-5 funds period.

They weren't stock's they were Mutual Funds, I'm under the impression that they are different. Also those 34 funds were divided up between 3 different section.
1. RRSP.....DW....Registered
2. RRSP.....ME.....Registered
3. Joint...............Non-Registered

Add them all up and it added up to approximatly 34.

I don't know for sure but you may have some grounds for suing the IG group.

As was mentioned earlier, I need to and will move on. No need to go that route.

At a 15% capital gains rate, the taxes will be painful but not hideous.
You menitioned that ISG has redemption charges. Given the horrible performance and advice you have been given I'd scream like mad about paying any redemption charges on funds, unless you explicited oked the purchase of that particular fund by your financial advisor.

Best of luck.

Feedback in this thread has mentioned anywhere from none to now 15% capital gains tax. Do you think that's what I will have to pay in Canada? As for screaming, he still stands by IG's decision to put me in those funds.

Thanks

 

[Meadbh]

Feedback in this thread has mentioned anywhere from none to now 15% capital gains tax. Do you think that's what I will have to pay in Canada? As for screaming, he still stands by IG's decision to put me in those funds.

Thanks

MD, in Canada, only 50% of your capital gains are subject to tax. The rate of tax depends on which tax bracket you are in. There is a marginal tax calculator at

www.walterharder.ca/MarginalTaxRateCalculator.html


A few days ago I said your FA was an idiot. I was wrong. He's an unprofessional, unethical idiot. He has invested your money in too many funds, many of which may include shares of the same companies. This is completely unnecessary. He has openly stated his intentions to fleece you. He is pushing life insurance, which there is no evidence that you need, and he is trying to sell you on estate planning that you don't want. This guy is simply not meeting professional standards. IG is well known to be a high fee firm, and they do have redemption fees, at least for the first few years of investment. However, what you are telling us is beyond that. IG is ultimately responsible for the performance of its agents.

Call the securities commission in your province, or the Investment Dealers Association (www.ida.ca/) or the Ombudsman for Banking Services and Investments (www.obsi.ca/obsi/pages_english/ehome.php3).

Finally, you, as the investor, have a responsibility to take more ownership of your finances. Either make the effort to learn, find a good, honest FA, or stick with simple investments. It's your choice.

 

[My Dream]

MD, in Canada, only 50% of your capital gains are subject to tax. The rate of tax depends on which tax bracket you are in. There is a marginal tax calculator at

www.walterharder.ca/MarginalTaxRateCalculator.html

So If I understand correctly, in the calculator above, I only put 50% of the capital gains in the area that says "Taxable Income”?

This guy is simply not meeting professional standards. IG is well known to be a high fee firm, and they do have redemption fees, at least for the first few years of investment. However, what you are telling us is beyond that. IG is ultimately responsible for the performance of its agents.

Call the securities commission in your province, or the Investment Dealers Association (www.ida.ca/) or the Ombudsman for Banking Services and Investments (www.obsi.ca/obsi/pages_english/ehome.php3).

I live my life under the understanding that I'm responsible for my own actions. I screwed up. I trusted someone that was in the financial business and wanted him to take over our portfolio. I know that it was still my responsibility to monitor and address issues that I thought were wrong. Although I voiced my opinions several times, I know now that it just wasn't enough. Whether I was just too burned out or just ignorant at investing, I took him for his word. When I finally retired 3 months ago I took the bull by the horns and said Enough! This is why I posted this thread and will learn by my mistakes and take whatever advice I deem necessary in order for me to rebuild.

Maybe the right thing to do is call the securities commission and so on, but I want to just move on.

Finally, you, as the investor, have a responsibility to take more ownership of your finances. Either make the effort to learn, find a good, honest FA, or stick with simple investments. It's your choice.

I'm in total agreement with you and since I've retired I make a point of trying to figure it out. In spite of all the headaches and confusion, I won't give up. I hope that by reading, monitoring and asking questions on this forum I will finally learn everything I need to be able to invest wisely on my own. My family and I depend on it.


Thanks for the reply Meadbh

 

[kcowan]

MD
You should at least present your case to the Ombudsman and get direction as to how to escape the deferred sales charges.

IG accounted for 16 complaints out of 46 in their category. The next highest was 5! So the Ombudsman should be sympathetic to your plight.

 

[FinanceDude]

The problem is using a finacial advisor vs a financial planner.
Do advisors need to have any creditials any specific education ?
As far as I know they often just need to have either a broker license to sell stocks or mutual funds or maybe an insurance lic.

Rather than buy books set aside a day at the library or barnes and noble and sit and find a book that fits your reading style. Best to print one of the lists so as to not waste time on books that may not be as good.
For most here the bottom line is to diversify into the index funds.

Being that he has money that he is moving. Wouldnt he be better off in some etf's and then later focus on funds ?

The only criteria most firms use for someone to become an advisor are a college degree and passing the Series 7 securities license. A lot of so-called "advisors" are really insurance salesmen who have taken and passed the Series 6 license, which allows them to sell mutual funds and VAs, but no securities, fixed income, or other financial products.

The firm that initially hired me required passing the Series 65 exam, now called Series 66. Passing the test makes one a Registered Investment Advisor (RIA). This means you can charge a fee to manage investments, whether by yourself or through outside money managers.

There are about 650,000 registered reps in the United States. I don't have the exact stats, but here's somewhat recent breakdown:

400,000 reps carry a Series 6
250,000 reps carry a Series 7

Of the 650,000, only 32,000 are CFP's.............not a big percentage.

 

[bongo2]

I believe it adds up to approximatly 34 funds

That makes some sense. If it is three accounts, then I can see how you could get to 34 funds.

There are 3 Possible things I have to pay.

1. Defered Service Charges.............IG
2. Capital Gains or $45 per fund charge ............Taxes or TDW

From the TDW letter you quoted, and my general experience (in the US) with these things, it sounds like you will be paying the defered service charges and the capital gains whether you liquidate the funds within your IG account or over at TDW. The only way to avoid or delay those would be to leave the money in the same funds. For the registered accounts, in a US IRA you would sell the mutual funds and then do a trustee-to-trustee transfer of the cash to a new IRA. I assume something like that is available for you.

 

[My Dream]

From the TDW letter you quoted, and my general experience (in the US) with these things, it sounds like you will be paying the defered service charges and the capital gains whether you liquidate the funds within your IG account or over at TDW. The only way to avoid or delay those would be to leave the money in the same funds. For the registered accounts, in a US IRA you would sell the mutual funds and then do a trustee-to-trustee transfer of the cash to a new IRA. I assume something like that is available for you.

From what I've been told, I would have to pay the DSC from IG regarless, they won't give that up. The only way to avoid Capital Gains would be to transfer the funds from IG to TDW in kind. That would involve paperwork on TDW's side at a charge of $45. per fund times 34 funds. I hope I understood them right. Either way, it's going to cost me, so it's sort of the path of least resistance so to speak. I'm going to have to pay capital gains eventually I just don't know whether this year is the right time to do so just to avoid the $1,530 charge from TDW. I read a book once that said to avoid paying Capital Gains for as long as you can since you could be earning interest (in the mean time) on that money you pay in taxes.

Hey, I've come along way from 3 months ago when I didn't even know what DSC's were? Slowly, painfully, but surely.