Fisher Investment Sued
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Good point. I was just assuming that they prepared some sort of risk tolerance questionnaire or interview with the client. I guess we don't know that answer.Fiduciary responsibility goes beyond just whats in the best interest of the client versus the broker. He will lose an arbitration if the risk tolerance doesn’t match the investment portfolio. So unless this retired couple had a risk tolerance of Aggressive (which I doubt), he’ll be toast. Even if it does match, he may still lose.
Have you had the client sign anything acknowledging your advice but deciding not to follow it?
I have all clients complete an Investor Risk Profile questionnaire. I also have them update it periodically. We meet monthly and document our meetings.Have you had the client sign anything acknowledging your advice but deciding not to follow it?
I have all clients complete an Investor Risk Profile questionnaire. I also have them update it periodically. We meet monthly and document our meetings.[/quote] I would be sure that you have something specifically stating your advice, the client's refusal, and it being signed by the client. You have the questionnaire demonstrating the client's low risk chararcteristics, then your meeting documentation - which will turn into a she said / he said argument. This will pushed by the firm to settle rather than spend the money to fight it in arbitration.[quote=Wet_Blanket]Have you had the client sign anything acknowledging your advice but deciding not to follow it?
Like I said, if you do a complete IPS and follow it, you should be fine. And document as well.
My guess is Fisher isn’t stupid. I’d like to think that RegisteredRep forum users are the only smart guys in the business, but I’m almost positive that’s not the case.
As much as I dislike Ken Fisher, I once sent a reply to one of his magazine ads and he sent me material for about 1 year, it is too hard to say he is wrong by allocating 100% of his clients portfolio to stocks without knowing all of the facts. Perhaps his 75 year old client has a liquid net worth of $2,000,000 with $1,500,000 in FDIC insured CD’s at the local banks and $500,000 allocated to stocks in Ken Fisher’s account. If Fisher is doing his job, and I mean “if”, then his portion of the money invested 100% in equities could be right on the money. I don’t know for sure that this is the case, but I wanted to put it our there.
That being said, I am constantly amazed when I ask “where else do you have money” and find out how many different places people keep it. In the last 6 months I have even heard of people keeping large amounts of money at home “stuffed in the mattress”–seriously!
Maddog,
Just get rid of the old biddy. You don't need the headache and clearly you aren't making any money. Either that or man up and tell her that's it's your way or the highway. Then if she doesn't agree you can kick her down the road. I don't know about you, but I don't need clients that won't take my advice.[quote=Lex123]Maddog,
Just get rid of the old biddy. You don't need the headache and clearly you aren't making any money. Either that or man up and tell her that's it's your way or the highway. Then if she doesn't agree you can kick her down the road. I don't know about you, but I don't need clients that won't take my advice.[/quote] Husband has a $600k Advisory Driven account with me. Two children have advisory-based account with me as well. So, relationship is worth the headache. Not a question about 'man'ing - up', was just a question of documenting suitability for HO purposes.The husband would probably be on your side (after some saber-rattling for the wife). After all, he’s married to her and knows all about her irrational behavior.
Maddog,
You're suppose to code the account to the risk level the client said she is at. It's very important to document, document, document. Even if she nevers files a complaint herself, her heirs could later on--they may argue that she is elderly and you took advantage of the situation. Situations like this can get messy. Make sure that when you have your monthly meetings, you continue to discuss risk tolerance. Also make sure the client understands the risks she is taking--test her understanding, and document that understanding. You don't want someone down the road to claim she "agreed and/or continued" to the current strategy without fully understanding the risks...they often claim they deferred to the investment professional. Regulators assume the investment professional should know better. Remember...SUITABILITY! Also, one other point...if you re-code the account for her stated risk tolerance, compliance's report will probably pick up the risk in the account. You may have to provide an explanation---they may also ask for documentation. From a legal/risk point of view, you should make sure the account is coded correctly- it can make a difference in arbitrations. Think about talking to your BOM about this situation.In arbitration, rocket scientists with degrees in mathematics are suddenly incapable of simple addition and subtraction.
Notes, documentation, heads up conversations with management will save you later.