Financial advisor question

Discussion in 'Finance, Investments, and Careers' started by Russ Smith, Jan 9, 2017.

  1. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    About 3-4 months ago we put some of the money from the sale of our house in an investment account. We did it with Wells Fargo because it's our regular bank, our local branch has Financial Advisors, and frankly after all their recent issues WF was bending over backwards to make it worth our time, lower minimum balance, lower fees etc because they were losing so many customers.

    Today I got a call from my advisor and was a bit surprised to hear he's no longer with Wells Fargo, and is actively recruiting me to move my account with him to his new company, Morgan Stanley. He's done pretty well so far but the market has been way up so virtually anyone would have. Nice guy, seems ok but I'm a little leery is it actually normal for someone to leave one company and then contact his clients to ask them to move over to his new company?

    he says it can all be done without any cost, in fact he said we'd stay in the same accounts and stocks although I'm not sure how that would happen I have to assume we'd have to sell them. The whole thing is annoying if we decide to go with him we have to figure out what paperwork it takes, if we don't, then we don't even know who our advisor is at WF, or if they're even going to give us one.

    I'm somewhat inclined to take the money and go to the advisor my dad uses instead.
     
  2. Linderbee

    Linderbee Let's GO, CARDINALS! Contributor

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    I don't know how much of this applies to your situation, because it specifically focused on retirement plans, but it's probably worth a watch and my guess is that some of it could be extrapolated & applied to you. I have just been leery of financial advisers in general since watching this.

    http://www.investmentnews.com/artic...-criticism-helps-fiduciary-duty-go-prime-time
     
  3. Reign Blood

    Reign Blood Tattooed Hundredaire

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    Take your money and buy a guitar, become a star and retire!
     
  4. 82CardsGrad

    82CardsGrad 7 x 70

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    It's very common Russ. And you wouldn't have to sell your existing positions. Your advisor would be able to transfer those assets into an account at Morgan Stanley without causing you to sell and then repurchase the assets.
    What's most important in matters like this, is your degree of trust and respect for the advisor... If you like the person, and he/she has never caused you to mistrust and disrespect him/her, AND, you feel no degree of commitment to Wells Fargo, this really should be a non event... particularly since the advisor is going to another very well-known, highly visible entity in Morgan Stanley. If the advisor were going to a much small/unknown firm and/or, you were shifting the assets into different types of holdings - perhaps more risky investments, then this would be a different story...
     
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  5. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    We've only known him a few months. On the one hand the reason he gave for leaving WF is solid, they were going to hike up fees for smaller accounts and remove many from being managed and he didn't like that approach. I agree with that.

    On the other hand it just seemed somewhat unethical to me, he got our business because he worked for WF. so him contacting us after leaving seemed a little like poaching to me but maybe it's normal in that industry.

    Not sure what we'll do. My other concern is of course WF charged a fee to open the account, i'm sure Morgan Stanley will too so I'm a little leery to pay that fee twice in less than 6 months.
     
  6. 82CardsGrad

    82CardsGrad 7 x 70

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    Guess you'll have to see if Wells will raise any fees on your current account and compare that to the costs associated with opening a Morgan Stanley account... but again, this type of "poaching" is extremely common in the financial advising world.
     
  7. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    He sent us a packet in the mail that even includes a statement from FINRA explaining the process of changing brokers etc so looks like you're correct that it's pretty common.
     
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  8. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    As someone that works as head of consulting and head of legal for a registered investment advisory firm that specializes in retirement plans, these new rules aren't applicable to what Russ is discussing. Also, these rules are really meant to rid the industry of the bad apples. I think a lot of the mainstream press is painting an inaccurate picture of the issue. And from my own personal dealings with the Department of Labor . . . they are way off in both their understanding of how the industry operates and their assumptions. It's undoubtedly time to update the rule (it originated in 1975 and hasn't changed since), but these new rules will have minimal impact on investors because the majority are with reputable advisors.
     
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  9. Ouchie-Z-Clown

    Ouchie-Z-Clown I'm better than Mulli!

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    It's very common. Unless Wells was providing you with something that the new broker dealer wouldn't, the real decision is did you like/trust what the individual did for you?
     
  10. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    Yeah I did we haven't switched to his new firm yet though.
     
  11. Superbone

    Superbone Phoenix native; Lifelong Suns Fan

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    Have you done anything yet? If not, I'd suggest switching over to Vanguard. Fees are a very important factor in using a financial advisor. Just a fee of 1% of assets under management will add up to a third of your nest egg over 40 years. Vanguard only charges 0.3% fees for active management.

    Better yet, learn how to do it yourself for no extra fees. Check out:

    https://www.bogleheads.org/wiki/Three-fund_portfolio

    This is a pretty simple and effective portfolio that's easy to maintain.
     
  12. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    I actually am still with Wells Fargo. We moved from the Bay Area to Elk Grove in Sacramento so we're in the process of being switched to a local adviser. I manage my own portfolio right now but this one is the one we had professionally managed
     
  13. Superbone

    Superbone Phoenix native; Lifelong Suns Fan

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    If you are comfortable managing yourself, you should stick to that for all of it. Those advisor fees really add up. It’s very unlikely that an advisor could make up for his fees if you were to follow even a simple 3 portfolio plan.
     
  14. LoyaltyisaCurse

    LoyaltyisaCurse Chad's got nothing on me!

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    He can ACAT it over without any negative effect. Rest assured his new employer is counting on him to bring over existing business. Despite many firms and banks in California having their employees sign non-compete agreements, they are unenforceable in California. If you truly trust him, I see no problem for you.
     
  15. Russ Smith

    Russ Smith The Original Whizzinator Contributor

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    The new guy at Wells Fargo did even better than he did but when I found out why it sort of ruled him out. When the first guy left WF it got transferred over to another WF guy who lived in Sunnyvale. In the first year we made 14%. Essentially they turned 50K into 57k.

    The problem is when we signed up my gf had made it perfectly clear we wanted to be in a lower to medium risk portfolio, she was VERY concerned about taking too much risk. The first guy made about 2500 of that, the next guy 4500. When I looked at what he was in he was in a much higher ratio of stocks. Now I in my own investments had a higher ratio of stocks than he did, but he was way over what my GF had agreed to. He made money doing it yes, but it concerns me that after we went into great detail about our risk tolerance, which is all in our account info, he had such a high ratio of stocks.

    And the other thing that bothered me if you were going high ratio of stocks, to make under 10% when the markets were up so much under Trump was actually not that impressive. My stocks are up about 20% in that time. If you're going to take that much risk in a bull market I expected to see better returns. But largely what bothered me is he took far more risk than we agreed to.

    We're in the process of transferring it over to someone local here in Elk Grove, they have us with a "personal banker" and she's hooking us up with an investment person. I had knee surgery and have been immobile of late but I can finally get around enough we'll probably meet them in the next 2 weeks and get that moved over.
     
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