Worst Thing You've Seen By Another Broker

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wallstreeter's picture
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This could be interesting!
Yesterday we had a client in his mid-30's come in to talk about moving his $150,000 IRA to us.  We look at his statement and it is obvious to us that it is in an annuity.  He has had several 401(k) rollovers before starting his own business and they all went into the annuity.  He said when he met with the guy who did this, all he wanted was an IRA.  He was never told anything about an annuity.  Most of it is still in surrender as it was a 6 year product.
Even worse is that his wife's $10,000 IRA was also put into an annuity.
What are the worst things you have seen done by another broker?

BullBroker's picture
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Joined: 2006-12-26

This guy came in the other day had an Edward Jones account, he came in saying he just bought all these funds last year and now his Eddie Jones guy is wanting him to get into some different funds.  So, I take a look at his statement (classic Ed Jones style) this guy has $400,000 in 4 different American Fund A-shares(classic Ed Jones).  I run the cusip on them and all of the top 10 holdings are exactly the same and the weights are the same.  On top of being anti-diversified the guy was hit with a 5.35% up-front and now his broker wants to pull them out a year later and hit him up for another front-load.  I quickly got the ACAT and explained to him what was going on.  How are these guys still in business?????????

Dust Bunny's picture
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Have a client who has a pooled profit sharing plan.  The part I manage is in funds, etf, stocks, bonds  and a cash account, all with liquidity since at any time they may have to take some of the pooled funds for retiring employees.  They have about 20 employees
Their other broker (before he disappeared) put over 750k (about half of their total plan) into two equity indexed annuities that have to be annuitized to get the money out of the contracts, using the owners as the annuitants and the PS Plan as owner and beneficary.  A totally inappropriate product for a POOLED PROFIT SHARING PLAN.  Pocketing a cool 10 to 12 % commission by the way. 
Now that the contracts have reached the end of the surrender period we have annuitized over a 10 year period so they can transfer the money from the annuity to their brokerage account where we can invest at a better return and have the necessary liquidity.
Needless to say the customers were p/o ed when they found out that they had given up access to the money that didn't really even belong to them.

theironhorse's picture
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wallstreeter-in my area of the country, I would say 50% of all IRA's I see are annuities.  Pretty sorry, but I see it all the time.  I have seen some ROTH annuities lately as well.

troll's picture
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wallstreeter wrote:
This could be interesting!
Yesterday we had a client in his mid-30's come in to talk about moving his $150,000 IRA to us.  We look at his statement and it is obvious to us that it is in an annuity.  He has had several 401(k) rollovers before starting his own business and they all went into the annuity.  He said when he met with the guy who did this, all he wanted was an IRA.  He was never told anything about an annuity.  Most of it is still in surrender as it was a 6 year product.
Even worse is that his wife's $10,000 IRA was also put into an annuity.
What are the worst things you have seen done by another broker?

First, he's not your client. Second, you're pissed that you can't play with his money. Did you really think that noone would see through your bullsh*t?

troll's picture
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Worst thing was done by a guy in my office.  Client had all B shares from various families, about 1-2 years old.  Guy sells all B shares, client pays the CDSC, and then puts him into C shares so he can annuitize his business.

troll's picture
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BullBroker wrote:This guy came in the other day had an Edward Jones account, he came in saying he just bought all these funds last year and now his Eddie Jones guy is wanting him to get into some different funds.  So, I take a look at his statement (classic Ed Jones style) this guy has $400,000 in 4 different American Fund A-shares(classic Ed Jones).  I run the cusip on them and all of the top 10 holdings are exactly the same and the weights are the same.  On top of being anti-diversified the guy was hit with a 5.35% up-front and now his broker wants to pull them out a year later and hit him up for another front-load.  I quickly got the ACAT and explained to him what was going on.  How are these guys still in business?????????
Care to name the 4 funds so we can see if you're lying? Did you lie to the guy about only paying 2.5% up front? What are YOU going to do? Churn him out of the funds? Add a fee to what he already owns?
I think THIS may be the worst thing I've ever seen someone do to a client!

troll's picture
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Gotta agree with BH on this one.  American funds are pretty good about overlap.  There is a nice overlap chart they put out and I think the worst two funds have a 34% overlap.  Some have 1-2% overlap.
 
I think BullBroker is fibbing.

Bache&co's picture
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Worse thing I see is what clients do to themselves without broker's help.

troll's picture
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Dust Bunny wrote:
Have a client who has a pooled profit sharing plan.  The part I manage is in funds, etf, stocks, bonds  and a cash account, all with liquidity since at any time they may have to take some of the pooled funds for retiring employees.  They have about 20 employees
Their other broker (before he disappeared) put over 750k (about half of their total plan) into two equity indexed annuities that have to be annuitized to get the money out of the contracts, using the owners as the annuitants and the PS Plan as owner and beneficary.  A totally inappropriate product for a POOLED PROFIT SHARING PLAN.  Pocketing a cool 10 to 12 % commission by the way. 
Now that the contracts have reached the end of the surrender period we have annuitized over a 10 year period so they can transfer the money from the annuity to their brokerage account where we can invest at a better return and have the necessary liquidity.
Needless to say the customers were p/o ed when they found out that they had given up access to the money that didn't really even belong to them.

YOu probably screwed them up Babs. Annuities that have forced annuitization don't have surrender periods. Which one are you lying about? Annuitization or the 10 year surrender period. Duh, nice job.

FreeLunch's picture
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I'll tell you what I just did.  This old lady had a house fully paid for, worth about $250,000
I sold her a reverse mortgage.
Then I took the proceeds and put it in an 18 year Equity Index annuity.
We're taking out about 5% per year for her to lease a brand new Lexus.
She's taking another 3% to pay for dues at the local country club for her junky grandson who is unemployed.
You guys think this is okay?

Bache&co's picture
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Seriously - do they do worse without us? - As in bad mistakes. Or do they fair worse with Free Lunch?
At least with bad brokers they seem to figure out they made a poor choice.
 

FreeLunch's picture
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I was kidding.  I don't think it could get much worse than that.

OldLady's picture
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wallstreeter wrote:Yesterday we had a client in his mid-30's come in to talk about moving his $150,000 IRA to us.  We look at his statement and it is obvious to us that it is in an annuity.  He said when he met with the guy who did this, all he wanted was an IRA.  He was never told anything about an annuity.  Most of it is still in surrender as it was a 6 year product. Even worse is that his wife's $10,000 IRA was also put into an annuity.
If this is the worst thing you've ever seen a broker do, then you must not have been in the business long . 

OldLady's picture
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BullBroker wrote:I take a look at his statement, this guy has $400,000 in 4 different American Fund A-shares....the guy was hit with a 5.35% up-front...   You do understand that A shares in one fund family, assuming mutual funds are the appropriate investment, would be the absolutely correct thing for the client with that amount to invest? 
If the investment was made a year ago, there is not a firm in the US where the client wouldn't have received the breakpoint automatically, Eddie Jones or no.  Just checked, the client only paid 2.5% on that amount invested. 
BullBroker wrote: I run the cusip on them and all of the top 10 holdings are exactly the same and the weights are the same.  How about sharing the names of these 4 funds?  Sure American has a lot of overlap, but I'm guessing you WAY overstated.
BullBroker wrote:How are these guys still in business?????????  That's what I'm wondering about you after I read this post.  Care to enlighten us as to the swell advice you gave him after the ACAT?

troll's picture
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FreeLunch wrote:
I'll tell you what I just did.  This old lady had a house fully paid for, worth about $250,000
I sold her a reverse mortgage.
Then I took the proceeds and put it in an 18 year Equity Index annuity.
We're taking out about 5% per year for her to lease a brand new Lexus.
She's taking another 3% to pay for dues at the local country club for her junky grandson who is unemployed.
You guys think this is okay?

You pretty much HAD to do that with your trailing 12 in the shambles that it is. Do whatever you have to do to keep Wachovia from tossing you out when they find out about you. They don't play with guys like you, unlike A.G. Edwards.

FreeLunch's picture
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That was a good one Bobby. 
Go sell some proprietary Annuities to some unsuspecting victims. 
And I'm just wondering, w.t.f do you do visiting the Rookie & Trainee sections anyway?  You aren't a rookie and you never offer advice....
U R A loser
I wrote that simply to see what you would say.  I love provoking your silly uneducated repetitive unconstructive criticism.  I can't wait to do some more.
 

troll's picture
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Ferris Bueller wrote:Gotta agree with BH on this one.  American funds are pretty good about overlap.  There is a nice overlap chart they put out and I think the worst two funds have a 34% overlap.  Some have 1-2% overlap.
 
I think BullBroker is fibbing.He's not fibbing Ferris.  He's a newb who doesn't realize just how ignorant he is.  I mean, how else can you explain someone who doesn't understand that if you're buying A-shares you have an ethical obligation to emphasize one fund family to get breakpoints?

FreeLunch's picture
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I've never understood why overlap is a bad thing.
If two of your funds are overweight, say.....MO
What does that say about MO?  Or GOOG?
I mean, hell...If those are "the best" stocks in the opinion of the managers, let them run with it..
I know PLENTY of you disagree with me on this one, but even with a HUGE overlap you'll still never be overweight any 1 stock too much.

AllREIT's picture
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joedabrkr wrote:He's not fibbing Ferris.  He's a newb
who doesn't realize just how ignorant he is.  I mean, how else can
you explain someone who doesn't understand that if you're buying
A-shares you have an ethical obligation to emphasize one fund family to
get breakpoints?

Stuff I've seen that was bad.

1) New issue closed end funds, Issued at a 5% premium to NAV, now trading at a 10% discount .

2) Various long bonds, that were not appropriate for the clients.

3) Annuities of all sorts and stripes. Annuities are a zero sum game.
If they a profitable for the Insureco they are overpriced for you.

4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.

5) Non-public REITs, no liquidity, lag from startup of operations, and questionable management teams/strategies.

troll's picture
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FreeLunch wrote:I've never understood why overlap is a bad thing.
If two of your funds are overweight, say.....MOCertainly it's better than to have 25 or 50 percent of your portfolio loaded up in one specific stock....but the idea of building a mutual portfolio is to be DIVERSIFIED to reduce risk.If you have too much overlap, say in GOOG, and they have a bad quarter, your client will be hurt by that emphasis.Overconcentration in a particular sector or STYLE(perhaps due to drift) is IMHO even more dangerous than having top 10 holdings in common.  If you get caught up in a secular downdraft in a particular sector(think of the tech wreck in the early part of this decade) you can really take a licking.

troll's picture
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AllREIT wrote:

4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.

What are you talking about?  I've never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.

FreeLunch's picture
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Yeah, I agree.
That's a good point.  For the most part, when building a diversified mutual fund portfolio, if you do it in the right way there will generally be hardly any overlap.
But if I am using two international funds, and both of them have 2% in Weyerhauser, and 2% in Roche Holdings, I'm not alarmed.  And neither would you be probably....  But if they are looking the same across the board it wouldn't make sense.
but you're right...I have seen some overlap in some of my portfolios, but I have still never seen any individual stock carry more than a 3% weighting.. but overlap is not top of the priority list, maybe it should be...

BullBroker's picture
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Since I am a "newbie" and you all think I to stupid to be in the business please explain this to me.  BREAKPOINT or no breakpoint what kind of an advisor sticks someone in all A-shares and one year later wants to sell them and put them in more A=shares???  Maybe an Indy would do that, I don't know.  Maybe you guys think that is the right thing to do with the client.  Obviously, even the client was smart enough to know he was getting screwed. 
As far as the American funds, um it takes maybe 35 seconds to go to their website and look at top holdings and wieghts.  Look at the Income fund, investment company of america, the income builder, for examples.  So I am assuming none of you have bought into the theory of DIVERSIFICATION.  Good luck to all of you if the market turns down. 
Bobby Hull is truly the MOST worthless/ignorant person I have ever even come in contact with.  Did you even have parents did they teach you anything about life????
You people do understand that when you by an A-share it takes the client x amount of YEARS to recover to the point where they break even.  Do they teach that to you at the "shopping center" INDY branches??????  Sounds like LPL needs to go out and train their advisors. 

AllREIT's picture
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FreeLunch wrote:but you're right...I have seen some overlap in some of
my portfolios, but I have still never seen any individual stock carry
more than a 3% weighting.. but overlap is not top of the priority list,
maybe it should be...

Overlap is the natural result of having funds with the same investment
style, and or same investment management. I'm reminded of one client I
saw with 5 different growth funds.

"I wanted to diversify."

Indyone's picture
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BullBroker wrote:Since I am a "newbie" and you all think I to stupid to be in the business please explain this to me.  You should quit digging the hole...you're looking dumber by the minute.  BREAKPOINT or no breakpoint what kind of an advisor sticks someone in all A-shares and one year later wants to sell them and put them in more A=shares???  Maybe an Indy would do that, I don't know.  You're right...you don't know.  Pot shots at indies don't make you look any smarter, either  Maybe you guys think that is the right thing to do with the client.  Obviously, even the client was smart enough to know he was getting screwed.  If you'd made this point and shut up, you'd have been much better off.
As far as the American funds, um it takes maybe 35 seconds to go to their website and look at top holdings and wieghts.  Look at the Income fund, investment company of america, the income builder, for examples.  I did look, brainless.  I didn't see anything even close to "all of the top 10 holdings are exactly the same and the weights are the same"  Your reading comprehension sucks to say the least.  So I am assuming none of you have bought into the theory of DIVERSIFICATION.  Good luck to all of you if the market turns down. I think it did that from 2000 to 2002...take a look how Capital Income Builder and Income Fund of America did those three years.  Keep digging, idiot. 
Bobby Hull is truly the MOST worthless/ignorant person I have ever even come in contact with.  Did you even have parents did they teach you anything about life????  The sad thing is, intellectually, he's running rings around you and you don't have the IQ to see it.
You people do understand that when you by an A-share it takes the client x amount of YEARS to recover to the point where they break even.  This statement is incredibly stupid.  At a breakpoint of 2.5%, if the fund averages 10% (and all the funds you reference average more than that), it takes exactly three months to break even.  Do they teach that to you at the "shopping center" INDY branches??????  You're breaking my heart...Sounds like LPL needs to go out and train their advisors.  You'd be screened out.  LPL won't take an advisor who's so ignorant about basic fundamentals.  Where'd you pull that 5.35% number from...your @ss?!!
You know, if you'd had the good sense to focus on the fact that swapping A-share mutual funds after only one year and left it at that, we could have agreed with you.  Instead you kept talking and disgraced Mother Merrill...how on earth did you make it through the screening?!!
You'd best quit posting and start reading and learning about this business before you fail out.  You don't even know what you don't know at this point.  (hint: look at Blarmston's posts if you want to see what a young intelligent advisor looks like...he's not posting sh*t like you are.)

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BullBroker wrote:Since I am a "newbie" and you all think I to stupid to be in the business please explain this to me.  BREAKPOINT or no breakpoint what kind of an advisor sticks someone in all A-shares and one year later wants to sell them and put them in more A=shares???  Maybe an Indy would do that, I don't know.  Maybe you guys think that is the right thing to do with the client.  Obviously, even the client was smart enough to know he was getting screwed. 
As far as the American funds, um it takes maybe 35 seconds to go to their website and look at top holdings and wieghts.  Look at the Income fund, investment company of america, the income builder, for examples.  So I am assuming none of you have bought into the theory of DIVERSIFICATION.  Good luck to all of you if the market turns down. 
Bobby Hull is truly the MOST worthless/ignorant person I have ever even come in contact with.  Did you even have parents did they teach you anything about life????
You people do understand that when you by an A-share it takes the client x amount of YEARS to recover to the point where they break even.  Do they teach that to you at the "shopping center" INDY branches??????  Sounds like LPL needs to go out and train their advisors.  I don't think you're stupid at all, but you do have a pretty rotten attitude.  That chip on your shoulder is going to keep you from learning things that could be important to survive or maybe even thrive in this business.The good news for you is that attitudes can be changed.  There is no known cure for chronic stupidity.You might want to work on your reading comprehension as well, because I did not in any way imply that I endorse churning.As far as breakpoints, I referred to them in a generic sense.  I did not specifically suggest that the use of American funds was optimal.  Although-I will point out that saving about 1/2 off MOP probably was a good thing.  In case you weren't aware, there are MANY good fund families out there who offer breakpoint pricing.  Just a little FYI.Why don't you ask your compliance manager or some of the more experienced advisers in your office to talk to you about how breakpoints can benefit clients, and some of the NASD guidance on those issues?Personally I don't like American so much because of the overlap you cite(and asset bloat and style drift), but they have shown some pretty good performance and I bet if you used that website you could put together a pretty good portfolio for the client.  I don't really use them any more.Since you opened the door, why don't you tell us if you helped the client improve their portfolio by using free exchanges within the existing fund family, or did you sell the funds and buy something else so you could collect a check?With most fund companies the breakpoint between A shares and C-shares is about 6-7 years as I recall.  But at the breakpoint levels you describe, the breakeven period is quite a bit shorter, I imagine.Class dismissed, junior.

troll's picture
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LOL  Indy great minds thinks alike?

OldLady's picture
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Now....back to stories of the worst we've ever seen. 
I left the wirehouse to go indy in Dec. '99.  Had a client, single guy who had been early retired due to disability (just a regular joe -- not high paid), 100k in his whole life savings (plus a paid-for house).  Had never invested in stocks or stock mutual funds and had no interest in doing so.  Was comfortable on his retirement & didn't need any income from the portfolio at that time -- due to the early retirement, he likely will at some point.  I had him in a bond/CD ladder, little bit in bond mutual funds and a fixed annuity.  I leave and he's too nervous to follow (likes the corporate shell) -- he knows one of the brokers in the office from Rotary or something.
He walks into my office October 2002, hands me a statement and says "Is there anything you can do to help me?"  What had been $100k 3 years before was now worth $40k. 
When this broker took over the account (remember this was Dec '99 or Jan '00), he said he could do much better for this guy -- put him into UITs invested in: Internet stocks, wireless stocks, telecom stocks, technology stocks, computer stocks.  Everything that was in bonds and bond mutual funds was sold in Jan. 2000.  The only reason he even had $40k was that the broker wasn't insurance licensed, so he couldn't be on the fixed annuity as rep, didn't know about it, and it was spared. 
I've seen a lot of bad through the years, but this sticks out as perhaps the worst, particularly because it was so inappropriate for the client's experience, knowledge and financial situation. 
 

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BullBroker wrote:BREAKPOINT or no breakpoint what kind of an advisor sticks someone in all A-shares and one year later wants to sell them and put them in more A=shares???
The same kind that ACATs those A shares in, sells them and puts him into a fee program or something else that lines your pocket.  Don't throw stones when you're surrounded by glass

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OldLady wrote:When this broker took over the account (remember
this was Dec '99 or Jan '00), he said he could do much better for this
guy -- put him into UITs invested in: Internet stocks, wireless stocks,
telecom stocks, technology stocks, computer stocks.  Everything
that was in bonds and bond mutual funds was sold in Jan. 2000. 
The only reason he even had $40k was that the broker wasn't insurance
licensed, so he couldn't be on the fixed annuity as rep, didn't know
about it, and it was spared. 

Well thats one case where the illiquidity of an annuity was useful

More seriously, this does bring back memories in 2003 of seeing exactly
this. I saw a case of two crunchy granola type Little old Ladies who
had had about $600K, invested in the usual old folks style (Muni's and
a few shares of IFF).

Then they found a smiling broker who managed to whittle that down to 100K using internet stocks, "socially responsible mutual funds" and frequent trading . The broker was later busted for churning and suitability issues across a whole host of accounts.

One of those events that helped push me down the indy/RIA path.

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OldLady wrote:The same kind that ACATs those A shares in, sells
them and puts him into a fee program or something else that lines your
pocket.  Don't throw stones when you're surrounded by glass

That would depend on the ongoing costs of the A-share vs the managed account. The original load is a sunk cost.

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Wallstreeter wrote:
Yesterday we had a client in his mid-30's come in to talk about moving his $150,000 IRA to us.  We look at his statement and it is obvious to us that it is in an annuity.  He has had several 401(k) rollovers before starting his own business and they all went into the annuity.  He said when he met with the guy who did this, all he wanted was an IRA.  He was never told anything about an annuity.  Most of it is still in surrender as it was a 6 year product.
Even worse is that his wife's $10,000 IRA was also put into an annuity.
This is the worst thing that I have ever seen.  People like this should have their butt kicked right out of the industry. 
 
 
 

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Wallstreeter,
Just to be clear, when I said, "people like this", I meant people like you.  I have seen far more harm done by brokers with a lack of knowledge than from being intentionally dishonest.
What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate? 

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joedabrkr wrote: BullBroker wrote:
Obviously, even the client was smart enough to know he was getting screwed. 
Since you opened the door, why don't you tell us if you helped the client improve their portfolio by using free exchanges within the existing fund family, or did you sell the funds and buy something else so you could collect a check?With most fund companies the breakpoint between A shares and C-shares is about 6-7 years as I recall.  This is and the fact that the client was getting screwed was the ONLY point I was trying to make.  BUT, thanks for taking a simple post and wasting everyones time by overevaluating everything(as usual).  AND, yes I do understand breakpoints and fund overlap, maybe I exaggerated to emphasize how much this guy was getting screwed, but he was all in the same style of funds and getting churned. 
AND, yes I did explain to him what was going on and what could be done without getting more screwed.  Had him fill out a questionnaire to determine his risk tolerance and profiled him.  Told him I would love to work with him and he left with his profile, ACAT documents and knowledge,haven't heard from him since.  Probably embarrassed by what had happened to him. 

troll's picture
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BullBroker wrote:
Since I am a "newbie" and you all think I to stupid to be in the business please explain this to me.  BREAKPOINT or no breakpoint what kind of an advisor sticks someone in all A-shares and one year later wants to sell them and put them in more A=shares???  Maybe an Indy would do that, I don't know.  Maybe you guys think that is the right thing to do with the client.  Obviously, even the client was smart enough to know he was getting screwed. 
As far as the American funds, um it takes maybe 35 seconds to go to their website and look at top holdings and wieghts.  Look at the Income fund, investment company of america, the income builder, for examples.  So I am assuming none of you have bought into the theory of DIVERSIFICATION.  Good luck to all of you if the market turns down. 
Bobby Hull is truly the MOST worthless/ignorant person I have ever even come in contact with.  Did you even have parents did they teach you anything about life????
You people do understand that when you by an A-share it takes the client x amount of YEARS to recover to the point where they break even.  Do they teach that to you at the "shopping center" INDY branches??????  Sounds like LPL needs to go out and train their advisors. 

I see that you refused to ask my questions in order to TRY not to look like an ass. How many years does it take to gain 2.5% in sales charges? I don't know which market you're looking at, but the one that the rest of us are using would indicate that this client has probably already made it back.

troll's picture
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anonymous wrote:
Wallstreeter wrote:
Yesterday we had a client in his mid-30's come in to talk about moving his $150,000 IRA to us.  We look at his statement and it is obvious to us that it is in an annuity.  He has had several 401(k) rollovers before starting his own business and they all went into the annuity.  He said when he met with the guy who did this, all he wanted was an IRA.  He was never told anything about an annuity.  Most of it is still in surrender as it was a 6 year product.
Even worse is that his wife's $10,000 IRA was also put into an annuity.
This is the worst thing that I have ever seen.  People like this should have their butt kicked right out of the industry. 
 
 
 

Do you advise your clients not to insure their other assets, too, like their homes and vehicles?

troll's picture
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BullBroker wrote:joedabrkr wrote: BullBroker wrote:
Obviously, even the client was smart enough to know he was getting screwed. 
Since you opened the door, why don't you tell us if you helped the client improve their portfolio by using free exchanges within the existing fund family, or did you sell the funds and buy something else so you could collect a check?With most fund companies the breakpoint between A shares and C-shares is about 6-7 years as I recall.  This is and the fact that the client was getting screwed was the ONLY point I was trying to make.  BUT, thanks for taking a simple post and wasting everyones time by overevaluating everything(as usual).  AND, yes I do understand breakpoints and fund overlap, maybe I exaggerated to emphasize how much this guy was getting screwed, but he was all in the same style of funds and getting churned. 
AND, yes I did explain to him what was going on and what could be done without getting more screwed.  Had him fill out a questionnaire to determine his risk tolerance and profiled him.  Told him I would love to work with him and he left with his profile, ACAT documents and knowledge,haven't heard from him since.  Probably embarrassed by what had happened to him.  Once you started making broad implications that indy's are mouth-breathers who screw their clients it was no longer a "simple post" trying to "empahsize how badly he was being screwed".Remember that the client had originally chosen this Jones rep and agreed to the funds in the portfolio.  If you beat him up so badly that he was too embarassed to sign the ACATS and do him a favor, you did him a disservice.The chip on your shoulder is too heavy for you to see that some of us are actually trying to help you.Good luck.

Dust Bunny's picture
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Joined: 2007-05-07

YOu probably screwed them up Babs. Annuities that have forced annuitization don't have surrender periods. Which one are you lying about? Annuitization or the 10 year surrender period. Duh, nice job.
Nope.  It was one of those Allianz bonus 10 products.  Even their attorney couldn't get them to let go of the money.  They could take a 5% free withdrawal during the surrender period and then had to annuitize over at least a 10 year period. 
They also put their personal IRAs in the same product which wasn't a problem since they plan to annuitize for extra income when they eventually retire.  The problem was with the pooled funds that they would have to get out at any time in any amount they needed.

troll's picture
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Joined: 2004-11-29

Dust Bunny wrote:
YOu probably screwed them up Babs. Annuities that have forced annuitization don't have surrender periods. Which one are you lying about? Annuitization or the 10 year surrender period. Duh, nice job.
Nope.  It was one of those Allianz bonus 10 products.  Even their attorney couldn't get them to let go of the money.  They could take a 5% free withdrawal during the surrender period and then had to annuitize over at least a 10 year period. 
They also put their personal IRAs in the same product which wasn't a problem since they plan to annuitize for extra income when they eventually retire.  The problem was with the pooled funds that they would have to get out at any time in any amount they needed.

Then you lied. They haven't even been out for 10 years. I think that product sucks, but your embellishment is shameful and disappointing. I thought you were better than that. I don't even want to go skinny-dipping with you anymore.

AllREIT's picture
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Joined: 2006-12-16

anonymous wrote:What's wrong with an annuity being in an IRA? 
More importantly for you, do you know the reasons why an annuity might
be appropriate? 

The tax deferal feature of the annuitiy is wasted in an IRA, but often
(though not always) it is the central element of the annuity pitch.

Without tax deferal you are left with insurance features of possibly
questionable value, illquidity/surrender charges and for sure a very
high expense ratio.

Dust Bunny's picture
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AllREIT wrote:anonymous wrote:What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
This has been beaten to death.  But again. You just don't get it. (and probably never will)
You need to look at all investments from the client's viewpoint and not from you own academic statitical analysis viewpoint.  The clients don't (usually) give a rip about the internal costs of the product if their money is SAFE. Especially their retirement money.  If they do care and can handle market volitility, then they don't invest in an annuity.
I seriously doubt that you are a real advisor with real clients. 
The tax deferral feature of an annuity IS redundant in an IRA. That isn't the feature that is the reason people put their retirement money in IRAs.  It is the guaranteed return.

OldLady's picture
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Joined: 2006-11-19

AllREIT wrote: OldLady wrote:The same kind that ACATs those A shares in, sells them and puts him into a fee program or something else that lines your pocket.  Don't throw stones when you're surrounded by glass
That would depend on the ongoing costs of the A-share vs the managed account. The original load is a sunk cost.
My Morningstar says the expense ratio on the 3 funds the kid gave us are:  ICA - 0.57%, Inc. Fd of Am - 0.56%, and Cap Inc Bldr - 0.58%.  Now what do you think?  Where's the client best served?

troll's picture
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Joined: 2004-11-29

joedabrkr wrote:
AllREIT wrote:

4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.

What are you talking about?  I've never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.AllREIT you never answered this question....enquiring minds want to know which B-shares pay a 1% trail and the CDSC charges get paid to the broker...

Dust Bunny's picture
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joedabrkr wrote: joedabrkr wrote: AllREIT wrote:4) B-shares!, which give you the 1% kickback of C-shares, and if you lose the client you get an bonus from the exit fee.What are you talking about?  I've never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.AllREIT you never answered this question....enquiring minds want to know which B-shares pay a 1% trail and the CDSC charges get paid to the broker...
Shhhhh..... he's madly Googling as we speak to try and find some.

troll's picture
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Joined: 2004-11-29

AllREIT wrote:anonymous wrote:What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
How many times have you been pitched an annuity? How much extra does the tax deferral feature cost?

troll's picture
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Joined: 2004-11-29

OldLady wrote:
AllREIT wrote: OldLady wrote:The same kind that ACATs those A shares in, sells them and puts him into a fee program or something else that lines your pocket.  Don't throw stones when you're surrounded by glass
That would depend on the ongoing costs of the A-share vs the managed account. The original load is a sunk cost.
My Morningstar says the expense ratio on the 3 funds the kid gave us are:  ICA - 0.57%, Inc. Fd of Am - 0.56%, and Cap Inc Bldr - 0.58%.  Now what do you think?  Where's the client best served?

First, the client is best served by the ethical rep who earns a decent income from helping people.  If the rep stays in business, he can work with and help his clients.  Clients cannot work with a rep who is not earning enough to keep their job and put food on the table.
Second, IMO, the client would be best served by adding Capital World Growth & Income to that asset mix.
Good diversification and overall low volatility.
Third, if the client sees value in the fee-based approach, then the client should move into that structure.  This should be after 3-5 years of the original A-share purchase - depending on the breakpoint.  Higher breakpoints can be moved over sooner than lower breakpoints.
Check with your compliance officer before proceeding.

troll's picture
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Joined: 2004-11-29

AllREIT wrote:anonymous wrote:What's wrong with an annuity being in an IRA?  More importantly for you, do you know the reasons why an annuity might be appropriate?  The tax deferal feature of the annuitiy is wasted in an IRA, but often (though not always) it is the central element of the annuity pitch.Without tax deferal you are left with insurance features of possibly questionable value, illquidity/surrender charges and for sure a very high expense ratio.
When was the LAST time you heard "tax deferral" as the advantage of an annuity?
The insurance features are of INCREDIBLE value - to the person who has market fears.
You are insuring a portfolio.  The portfolio has charges.  So does the insurance.  If you want a specific kind of insurance (rider), it costs a little extra.
The question is:  does it make sense for your client?  Does the client think it makes sense for them?

ChrisB's picture
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Joined: 2006-06-02

Easy question.When I first got into the business I worked for American Express Financial Advisors (now Amerprise) for a Senior Advisor (I was a paraplanner).  It's a very long story, but I will summarize it.  My boss was selling mutual funds within client accounts without the clients knowing, turning around and buying AEFA's ultra expensive financial plans (worth financial plans I might add).  We all (the rest of her team) had no idea it was going on.  I left in Dec., primarily because the Advisor was a total idiot with very little investment knowledge (pushing AEFA funds left and right).  Her licenses were fully revoked and the entire practice was shut down in March.  The investigation is still going on.  Ugly ugly person, inside and out. 

BullBroker's picture
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Joined: 2006-12-26

Joedabker I completely agree with you, when people start insulting my intelligence I get a chip on my shoulder and have a bad attitude.  I need to learn to control how I react to other people. 
“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company... a church... a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past... we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you... we are in charge of our Attitudes.”
Charles Swindoll
Bobby Hull take this quote and tattoo it to the back of your hand, and read it before getting out of bed everyday!
 

troll's picture
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Joined: 2004-11-29

OldLady wrote:
Now....back to stories of the worst we've ever seen. 
I left the wirehouse to go indy in Dec. '99.  Had a client, single guy who had been early retired due to disability (just a regular joe -- not high paid), 100k in his whole life savings (plus a paid-for house).  Had never invested in stocks or stock mutual funds and had no interest in doing so.  Was comfortable on his retirement & didn't need any income from the portfolio at that time -- due to the early retirement, he likely will at some point.  I had him in a bond/CD ladder, little bit in bond mutual funds and a fixed annuity.  I leave and he's too nervous to follow (likes the corporate shell) -- he knows one of the brokers in the office from Rotary or something.
He walks into my office October 2002, hands me a statement and says "Is there anything you can do to help me?"  What had been $100k 3 years before was now worth $40k. 
When this broker took over the account (remember this was Dec '99 or Jan '00), he said he could do much better for this guy -- put him into UITs invested in: Internet stocks, wireless stocks, telecom stocks, technology stocks, computer stocks.  Everything that was in bonds and bond mutual funds was sold in Jan. 2000.  The only reason he even had $40k was that the broker wasn't insurance licensed, so he couldn't be on the fixed annuity as rep, didn't know about it, and it was spared. 
I've seen a lot of bad through the years, but this sticks out as perhaps the worst, particularly because it was so inappropriate for the client's experience, knowledge and financial situation. 
 

 
yes but think of all the commissions the rep generated that would have normally been stuck in some fixed income investments.  The rep in turn had more money to spend and therefore stimulated the economy!

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