Worst Thing You've Seen By Another Broker
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[quote=FreeLunch]
I’ve never understood why overlap is a bad thing.
If two of your funds are overweight, say.....MO
[/quote]Certainly 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.
[quote=AllREIT]
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.
[/quote]
What are you talking about? I’ve never seen b-shares that pay the CDSC to the adviser, much less a 1% trail.
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...
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.
[quote=FreeLunch]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…[/quote]
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.”
[quote=BullBroker]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?!![/quote]
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.)
[quote=BullBroker]
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.
[/quote]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.
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.
[quote=BullBroker]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???[/quote]
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
[quote=OldLady]
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.
[quote=OldLady]
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.
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.
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?
[quote=joedabrkr] [quote=BullBroker]
Obviously, even the client was smart enough to know he was getting screwed.
[/quote]
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.
[/quote]
[quote=BullBroker]
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.
[/quote]
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.
[quote=anonymous]
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.
[/quote]
Do you advise your clients not to insure their other assets, too, like their homes and vehicles?
[quote=BullBroker][quote=joedabrkr] [quote=BullBroker]
Obviously, even the client was smart enough to know he was getting screwed.
[/quote]
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.
[/quote]
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.
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.
[quote=Dust Bunny]
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.
[/quote]
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.