My son recently left his employer and was contacted by an investment company

[TrophyWife]

Here's what they are telling him about a profit sharing account they need to open for him...it's sounds sketchy. It's from his old employer that he left 2 weeks ago. The firm name is Jackson Financial Management.

I received your forms…thank you. I am, however, re-sending the Client Data Form because it was not filled out completely and all of the sections were X’d out. This is a Suitability form and is required information through our compliance regulations and is not given to anyone on a list, etc. The information below in black was sent to you on the original email. My new notes that are in red:

1. Please complete Years of Investment Experience (if any). If you have no investment experience that is fine….please put a checkmark in front of “No Investment Experience”



2. Please complete Financial Information where highlighted on Page 2. Please complete your Annual Income, Liquid Assets and your Net Worth.



3. Indicate your Investment Objective choice as to how the assets are to be invested. See page 3 for the options, which are from Conservative to Aggressive Growth.…..Age Based, Conduit & Self-Directed are not applicable to this type of account. You chose Self-Directed which is not an option for this type of account. Please select Conservative, Moderate, Growth or Aggressive Growth.



4. Sign/date. Note: The Overall Investment Objective and the Investment Objective for the account will be the same since there is only one account. Please fill out in both places.



5. Once completed please re-sign & date and return.



ALSO, you did not select nor return the Beneficiary Form, as you stated in your email that you won’t be having a beneficiary on your account.

If a beneficiary is not chosen this can cause a complex situation, which includes going through the State (court) to create an Estate account, which would make the Estate the inheritor of your assets, which creates even further issues. This all could be avoided if one had selected a beneficiary. Do you have anyone you would like to leave your assets to in case something happened to you….a parent, sibling(s) or friend??You don’t have to list their Social Security number or date of birth if you don’t know it….a name, address, relationship to you and their phone number would work and the percentage amount you would like to leave to each person. I have attached it again for your convenience. Please complete (it’s typeable) and be sure to sign & date in Part IV.

​

Do they really need answers to all this stuff? He is an index fund investor and owns property but he's very young and believes in stealth wealth.The original form they sent him to fill out had his boss' SS number on it so they seem to be loose with unsecured email.

He will be getting about $800 from this and maybe some next year but he's uncomfortable with the strongarm approach.

Any thoughts?

 

[Walt34]

Hmm... Not a word about expenses? Including his boss's SS number shows real sloppiness/negligence with personal data.

I'd ignore it.

 

[TrophyWife]

Hmm... Not a word about expenses? Including his boss's SS number shows real sloppiness/negligence with personal data.

I'd ignore it.

It just seems a little off. He may have been given information when he started at the job 2 years ago but he hasn't heard anything since that time about profit sharing or this company. And the person who contacted him is an administrative assistant.

He's thinking the $800 isn't worth it

 

[Walt34]

I missed the $800 amount in the original post. Is this in some type of stock ownership in the company or something? Where I come from $800 is not a lot, but it is more than pocket change so it may be worth looking into for him.

Is the profit sharing account the only way he can get the money? Perhaps he could just cash it out and put it in other investments.

 

[euro]

Or, he could just make something up for most of the questions and ignore the one about beneficiaries. Then find out how to transfer the cash out at his earliest convenience.

 

[RunningBum]

Or, he could just make something up for most of the questions and ignore the one about beneficiaries. Then find out how to transfer the cash out at his earliest convenience.

That's what I'm thinking. I'd also tell the HR person or former boss about the boss's SS number being given out. That might make them think again about who is handling the profit sharing.

 

[bw5972]

I have filled out similar questions upon account origination at E*Trade brokage. I believe this is either required by the SEC or is at least CYA for the brokerage firm. i.e. If you were to request and receive added account features (options trading, etc...) you can not come back after negative results and claim you were a novice investor and hold them responsible.

 

[athena53]

I have filled out similar questions upon account origination at E*Trade brokage. I believe this is either required by the FTC or is at least CYA for the brokerage firm. i.e. If you were to request and receive added account features (options trading, etc...) you can not come back after negative results and claim you were a novice investor and hold them responsible.

This. I've had to fill out something like this every time I opened a brokerage account. Some investments aren't appropriate for people with assets or income below a certain level. It does sound like the firm is otherwise pretty sloppy, though.

 

[TrophyWife]

Or, he could just make something up for most of the questions and ignore the one about beneficiaries. Then find out how to transfer the cash out at his earliest convenience.

Thats what he's thinking...and i guess he can just ask to have the money and not invest it.
Or take the penalty if there is one so he doesn't have to deal with these people.

 

[lemming]

I would worry more about the balance being eaten up by fees. If he can't add to that account or wants to invest on his own, have him fill out the forms with random numbers and beneficiary 'to the estate of' (why not choose Mom ) and remove money when available.

 

[Texas Proud]

I would contact them and say I want a distribution... if it can be rolled over then roll it over...

I would NOT leave it where it is if I did not have too....

 

[LOL!]

There was a similar query over at bogleheads.org with the result was that many companies have interpreted FINRA to require this info, but it actually does not.

Check it out: https://www.bogleheads.org/forum/viewtopic.php?f=1&t=217957&p=3352650

Also, my wife's company just contributed the profit sharing from last year to her 401(k). If your son was employed last year he would get this money even if he quit work 2 weeks ago. I received additional money to my old 401(k) even 14 months after leaving my company. So it is possible that he is going to get profit sharing.

I wonder if the SSN was really the EIN for the company and/or retirement plan?

 

[TrophyWife]

There was a similar query over at bogleheads.org with the result was that many companies have interpreted FINRA to require this info, but it actually does not.

Check it out: https://www.bogleheads.org/forum/viewtopic.php?f=1&t=217957&p=3352650

Also, my wife's company just contributed the profit sharing from last year to her 401(k). If your son was employed last year he would get this money even if he quit work 2 weeks ago. I received additional money to my old 401(k) even 14 months after leaving my company. So it is possible that he is going to get profit sharing.

I wonder if the SSN was really the EIN for the company and/or retirement plan?

It was his personal one, I was wondering the same thing. Its a real estate group.

 

[FlaGator]

There was a similar query over at bogleheads.org with the result was that many companies have interpreted FINRA to require this info, but it actually does not.

FINRA requirements or not, these are typical questions in my experience

I wonder if the SSN was really the EIN for the company and/or retirement plan?

Easy to tell from the format:

SSN:xxx-xx-xxxx
EIN:xx-xxxxxxx

 

[pb4uski]

For $800, I would just tell them that I want the cash and forget their form.

He can then take the cash, put it in a tIRA and if he qualifies get the savers tax credit.

 

[gcgang]

Yes, all that information is required and is routine. It sounds like they are trying to help him understand the drawbacks of not having an IRA bene.

$800? That's the total account balance? Gee, at 1% the greedy financial company will be raking in $8/year. Might pay for all the time required to deal with this in about 100 years.

Stay stealthy. Cash out the $800, after penalties and taxes, go buy 1/4 bitcoin.