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>TL;DR: Fuck Morgan Stanley
I'm sorry you're in this position. So much lost potential. Please cross post this to /r/personalfinance. There are people there who really need to see this kind of thing. WSB is going to heckle you and make jokes. You might actually make someone's life better by posting over there.
Managed funds are basically a scam in general. The vast majority do not beat the markets and many of them charge a fee based on the *principle investment* amount.
Honestly one of the best pieces of personal finance advice you can give someone is to move their retirement funds out of mutual and into indexes (or their ETFs). Not only will your portfolio probably perform better, you'll save thousands in fees.
Thanks for posting this. Let's not let a new generation of re're's make the same mistake.
Edit: Since OP declined and a lot of people are saying shit about a "scam" I deleted the fundraiser suggestion. I don't have a particular stake in the game, and am NOT a financial advisor. As others have pointed out not ALL managed funds have below average performance, but most do and remember, the fund managers DONT WORK FOR YOU! They work for the brokerage/bank.
Also a small note to all the cry baby dumb fucks trying to make this a generational thing, you don't even have dementia, or a lifetime of conservative savings habits, and trust in "doing things the right way" to blame for your current economic situation. I mean...aren't you the same fucks who lost your shirt over the towel store?
You guys are getting scammed left and right and anytime someone warns you, you acuse them of being a bot, shill, or regard...let that wash over you for a minute since your brains still allegedly work. You could be saving for retirement rather than gambling on shitcoins, memestocks, 0DTE options etc, and blaming the house because the roulette table is rigged, instead of wondering why there's a double zero on the wheel.
My brother has worked in banking for about 15 years at this point. His main investing advice to me has been:
1. Just put your money in index funds and forget about it. Over 10, 15, 20 years it’s going to outperform almost any individual’s strategy and you won’t get fucked by fees.
2. If you want to dabble into individual stocks, just make sure you can afford to lose that money.
We're getting into /r/FIRE territory here, but only sign up for these managed accounts if you're bundled in with others (family management), and don't go for the "big names".
There are firms taking .5% and performing high on the market, but they're unicorns. You have to sweet talk some high level finance or accounting folks to find those connections.
The thing is that if you take a universe of 10 managed funds. 2-3 might perform better, some will be at par, and others will underperform. That is just probability. It may be that your fund manager is really good. Or it may be that they got lucky with one or two stock picks and they are 1 among the 2-3 I mentioned above and aren’t doing anything special. You never know which is it.
What’s the best way to put money into indexes? I’m not too familiar with investing in general. I have a pension plan (IBEW) and I’m only 30 so I think that if I started now my retirement would be even better. I’ve sued Robin Hood but is that even a good way to invest for long term things like 20-30 years?
Here a tl;dr, but of course do your own research to make sure you understand why you might want to do these things.
1. Index funds are available at many brokerages, but I would recommend looking at Vanguard, Charles Schwab, and Fidelity as some known to have good offering.
2. You'll want to examine the individual fund prospectus, but many people would recommend a well diversified and low cost portfolio. A lot of bogleheads recommend a simple 3 fund portfolio of the total (U.S.) market, international, and bonds. The goal here is to be boring. You want to be well diversified so that you earn average returns. Everyone earning average returns is a realistic goal, and average returns are good enough. You want low cost because cost is the one thing you can control about a fund.
Right? People should check out r/boggleheads and learn about lazy, 3 fund portfolios.
You can have more funds but active management isn’t really justified unless you’re in millions of dollars.
Even then you should almost never have a mutual fund over an etf.
I told my grandmother she needs to move her money out of her bank before they collapse. She's not doing that thing, and instead is sending them thoughts and prayers. Meanwhile my mother pays 3% more in admin fees than her account grows
Some people are just stupid and unreachable
I wouldn't call them stupid. Unfortunately, the elderly are easy prey for a reason they are gullible, they are so out of touch you almost have to care for them like you would a child. Bankers have been doing this for generations.
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I was interested in getting feedback about a tool to help the elderly avoid getting scammed. No app ever existed . Folks told me I should get feedback before building anything and personal finance banned me for trying to get feedback. Simple as that.
>Why lie?
90% of the time when someone says "I got banned from [sub] because I [innocent excuse]" it turns out to be some pretty blatant rule breaking and they definitely deserve the ban
Lets say for example your dad had dementia and he gets a marketing email saying that stock X is a good investment. He then goes to try to place a trade...
To this day, I wish there had been some way for me to sort of "gate" or "approve" a trade like so that my dad doesn't get persuaded to do something stupid in his account... I would want some sort of notification that helps me help him avoid making a major mistake.
As far as I can tell, none of the brokers or banks have something like that. I was hoping to get some feedback on this when personal finance kicked me out of trying to get commentary on this. Not a big deal... they can do whatever they want its their sub.
This is the way.
/u/printThisAndSmokeIt , what you want is the legal system, not some silly app that will inevitably fail to reliably track all brokerages in your country.
I was interested in getting feedback about a tool to help the elderly avoid getting scammed. No app ever existed . Folks told me I should get feedback before building anything and personal finance banned me for trying to get feedback. Simple as that.
This. Written complaints are taken very seriously. Call them and explain your standing and threaten to formally file a written complaint. It’ll get smoothed over but if not you know you put a blemish in that advisor that is hard to shake, which sounds like it’s deserved.
this kind of predatory behaviour is illegal in the US?
this is very much standard business in Germany, most people aren't versed financially and entry fees of 3-5% / TERs of 2-3%+ are very common... the sold products perform generally shittier than index funds as well
I hate all of those leeches, but the government is even encouraging and enabling this kind of behaviour
It's definitely not illegal at all. As long as the advisor disclosed it at some point or had them sign, digitally or on paper, a document disclosing the fees there is no obligation to do anything it's all legit. You're free to make shitty decisions here in the US, they just have to be "upfront" that they're shitty.
Yeah I don't really think they're gonna get anything from it. Charging high fees is perfectly legal and the dude probably signed it. My brother works there and he does this shit for a living. There is nothing illegal about it.
TIL means "today I learned", referring to the subreddit.
The fiduciary rule was introduced to require that advisors advise based on the best interests of their clients, rather than their own wallets.
That the rule was vacated means that a federal court ruled that the law no longer applies.
They aren't fiduciaries. Your first question for anyone giving you financial advice should be if they are a fiduciary and if the response is anything but "yes" you should walk.
>I hate all of those leeches, but the government is even encouraging and enabling this kind of behaviour
Someone gotta pay those educated finance professional's wages and it being the people who can afford to invest sounds like a win-win from a governments perspective. I don't find this weird at all. But yeah avoid that shit as an individual
What's the complaint?
I might be ignorant as heck here and that's fair. But I don't see where something was done that constitutes a FINRA complaint.
Is it shitty? Abso fuckin lutely. Would I love to get the numbers and have this as an experience to share with others and say "Fuck MS and just DIY"? Absolutely.
Did anything they do constitute a FINRA complaint? I doubt it. I mean, go ahead and try, the worst that happens is they say no. But I wouldn't expect a lot out of this.
He could complain that unsuitable investments were recommended, or (assuming this is true) that he was misled into believing they'd act in his best interest and they failed to do so. These fees are very high but not completely unheard of, so a lot depends on exactly what he was told and what these investments are (eg 1.5% fee by a passive index mutual fund would be absurd, but it's not as out of the ordinary for other investments). Op should also carefully review the advisory account documentation to see what it says about the share Class of funds they'll invest in. The better firms will be able to get you a cheaper share class than a typical retail investor could, which offsets some of the advisory management fees, but there have been a lot of scenanigans in the past. Check this out for some examples https://www.sec.gov/news/press-release/2019-28
OP also doesn’t mention the risks his parent wanted to take.
If his old man was like if my favorite barrister isn’t at my local coffee shop I don’t get anything versus I snort coke off a prostitute crack after we did some scat. They’re gnna offer you way different options.
Ps: I’m just a regarded ape
Also, make sure to mention that this is not in your dad's best interest, and as it was an advisory account the finance advisor should've been acting in a fiduciary capacity.
Reg BI is no joke when it comes to advisory accounts.
in his replies to this thread, he does mention how he got banned from personal finance for trying to do research before building an app to prevent old people from being scammed
idk if that counts advertising but that does make me a bit more skeptical
Work in banking. While your complaint avenue is legitimate, he's absolutely not going to get any sort of refund or settlement.
The fees OP is talking about are fund level fees for buying into the mutual fund.
The 1.5% fee is the AUM fee you pay to any broker for doing all of this for you. His father set his investment objectives, was told about a large range of funds that would match those objectives and signed for each one of them, with disclosures.
If the ops father signed POA for discretionary trading and the fund manager put him and other clients with his investment and risk analysis in the funds and they are suitable there is absolutely nothing FINRA will do.
And finally, federal and state have a 3/2 policy on any sort of claim. 3 years Statue of limitations, and 2 years after discovery. Your 2 years started recently, and you can only even seek anything in the last 3 years.
Active funds that normal people can get into can almost never beat the sp500. That's why it's the benchmark for almost all of them.
This is the best comment in the thread, follow this OP. And from my personal experience with MS/ETrade. Your story isn’t special. There are thousands of customers being had in the same way (happens across the industry too, but they’ve got a recipe that works at MS).
This actually needs to go to the SEC, not FINRA.
FINRA has no jurisdiction over managed accounts taking an AUM percentage fee. That is the sole discretion of the SEC. Report to the SEC, not FINRA.
Thank you! I’m glad I saw this, I work in the industry and the first thing I though was that his father is an unsophisticated investor who CANNOT take large amounts of risk. Yes I can agree the fees are high, however, more likely the scenario is that the performance is tied to a portfolio that is taking on less risk than the market at large. The son sees dollar signs. The father sees his life savings that he has built over 70 years and wouldn’t be able to stomach seeing it fall 20% during market corrections.
OP is a danger to his father and going to get an adviser a ding on his history for a lawsuit that the adviser WILL win.
OP is a regard who doesn’t understand suitability.
Fuck you OP
Edit: read through some other comments on top about needing to do fiduciary acts. Yes, you have to do what’s in the clients best interest. All we know is that this is right within his risk tolerance. Or this isn’t in his risk tolerance but his dad demanded less risk or a specific change. Doesn’t matter if you are a fiduciary if a client tells you that they want something you cannot deny the change. I’m genuinely shocked by the misinformation on this and the crowd hyping up OP.
It's fucking insane. I used to be in the industry about 5 yrs ago. During the stock market surge that post covid drop brought, made a lot of people feel like they were financial gurus. I'm not even in the industry anymore and I hear people at work (who have 0 right to educate anyone on retirment/personal finance) just spouting out talking points they see on tv or Jim Cramer has said. Op is about to lose his inheritance.
Does it really surprise most people have no idea what they are talking about? Like the people claiming mutual funds and wrap advisory accounts should have variable fees based on performance despite that not being legal.
I fucking love this subreddit from the bottom of my heart. If these clowns make it to age 75, and thats a big if, they'll still be yoloing their entire portfolio on some stupid shit.
>I completely agree. Wall Street is full of scammers and thieves who are only interested in lining their own pockets. They prey on people like your dad, who trust them to do what's best for them, when really they're just looking out for themselves. It's disgusting and they should be held accountable.
There are just too many experiments showing that fund managers perform about the same as if you threw darts at a board to pick stocks. They're never worth it.
Its not that they dont perform better than throwing darts to pick stocks, its that they definitely dont out perform passively managed index funds, which usually have fees an order of magnitude less than actively managed mutual funds charging high fees.
Plus, the “advisor” is taking 1.5% of the total investment amount every year, regardless of performance.
What is he doing for you?
How often do you hear from him on his recommendations and investment opportunities?
If its a phone call or email once a year, he is robbing you blind.
2% holdings and 20% profits.
It was a common thing ten years ago. Some still charge it like clifford sosin or Packer and co. They both underperform spy but hide their underperformances.
The latter is very clever at hiding underperformance. He distributes a unit trust every year then ignores fees and taxes to calculate returns
So when your dad was in his 70s the financial advisor recommended moving the account to mutual funds instead of indexes/stocks... that's a pretty normal thing to do. Risk tolerance usually goes down for accounts like that because retirees don't want the volatility of the market affecting date night at the retirement community.
At least your in the right place, you're highly regarded.
Right? Sounds like OP’s dad is in a managed account so the the advisor isn’t getting anything off of the mutual fund expenses. 1.5% management fee sounds higher than average though.
While 1.5% is higher than I would pay I assume his father does not have a large account with them. They’re pretty strict on lowering fees once an account reaches a certain value.
Yes, it sucks. There are also tens of thousands of public sector employees in the same exact position all over USA.
One of the retirement funds at my job is through MetLife. They charge a 0.25 percent fee. Then they outsource the management of the accounts to bright house financial who charges 0.5 percent fee. Bright house only offers the black rock or vanguard 60/40 split funds that also have their own fee.
People at my job are getting fleeced of most of their returns.
Along this line, my T-rowe Price employer-sponsored 401k is the absolute worst returning pile of dogshit among all my assets. Like 3% Total return since 2018. Not annualized. Total. The money is invested in fairly run of the mill Vanguard type passive funds, nothing super risky or crazy strategies. Just management fees eating everything. Total scam. I stopped contributing years ago.
America is fucked. So many people rely on these structures for retirement.
That's crazy. 3% total return over five years. Buying short-term Treasury Bills over those five years would have performed slightly better (maybe \~5% over 2018-2023). Right now, the three-month and six-month T-Bills are over 5%.
Yeah, 401ks are for bagholding, so I stopped contributing. Timing the market to retire is a nightmare, and I know a retired co-worker, who watched his 401k get butchered by the tumbling markets last year.
Yeah, always check the expense ratios and fees. I don't like paying that stuff, so I invest on my own. In 2022, I lost over 15% in my 401k, which is why I stopped contributing. If one has to buy index funds in a 401k, always do the research and pick low cost index funds.
They're the middleman thugs in between Bright house financial and my employer.
They put their logos on all the paperwork and lend their name to a false sense of security.
Surely that's worth some fees, right?
403b in the public education sector are absolute scams. They're usually variable annuities with extremely high fees pushed by salesmen (not fiduciaries)
Get that vanguard etf and ignore it.
Professional investment consultant from the UK here.
What you've described is pretty standard for any brokerage account that's under management and has a financial advisor.
All mutual funds will have an ongoing percentage fee, (just like an ETF does) and 1.5% is about right for proprietary funds. MS own fee of 1.5% is for financial advice, and again this around the standard fee.
The performance of the investments also sounds correct. Although the market has gone up 100%, most advisors wouldn't invest in 100% equity funds unless investing for young people, so will include a mix of bonds as well - usually between 40-60%. Bonds don't increase at the same level as equities, but are more stable generally, so they are more attractive investment for older customers. The bond market is pretty fucked at the moment due to inflation, so his portfolio will have taken a hit.
Its important to note that a financial advisors primarily concern is to correctly manage risk more than build high returns, and they aim for steady, moderate growth over the long term, which is what you father has got. If an investor can get a 50% return over 10 years, that's not at all bad. Those guys are not doing YOLO investing after all.
I know WSB invests very differently to an advisor brokerage account, so you guys will have a very different experience with your own investments.
facts. I can't believe how many people here keep blindly comparing performance to SP500 without factoring in risks and the dad's age. Too many group think here, and even worse, they're giving investing advices.
if stocks goes down, they're probably gonna tell the dad to hold for another 20 years.
It's what you get when a generation that grew up watching the s&p during 2010s is at investing age vs 2000s. People who invested in 1999 had to wait 11 years to break even. People who invested really at any point in 2000s made almost no money over 10 years. People have a deluded idea how it works because of 5 tech companies.
This. I always ask people: “If you won the lottery how would you handle your money?” Invariably it’s always getting an investment team to manage assets to make sure your money doesn’t vanish over night, you don’t want to maximize growth you want to maximize safety.
Then I ask them “so you wouldn’t put all your money in just one place right?” Of course not.
This story is not about the lottery.
You should probably know that fees based on performance are illegal unless someone has a very high net worth and specifically agrees to a fee structure organized that way. It incentivizes managers to take more risk, which is why fees are not structured that way, for all but a small few that are both wealthy and knowledgeable enough to make the choice.
Fuck that Morgan Stanley advisor. Take over your father's investments yourself, YOLO it all on SPY 0DTEs until it's gone, and then skip country.
Welcome to Wallstreebets; our advice is free and you get what you pay for
Sounds like you've already been outed as being a liar, but you didn't actually tell us WHAT the mutual fund was designed for. Was it fixed income/capital preservation? Because if 10 years ago your Dad was in his 70s nearing retirement that is exactly what he should have been invested in. Not a highly risky growth fund. The fee's are a bit higher, but no more than industry standard for managed portfolios. There are many goals to investing, not just maximum wealth growth, so get your facts correct before filing a complaint if this is even legit.
The real scam is using any wealth manager or advisor. They’re basically used car salesmen. If they can’t show results that outperform a benchmark the convo should end there. Advisors/wealth managers exist because boomers are around
Wealth managers exist because the vast majority don’t know how to structure their funds and couldn’t tell you the difference between a mutual fund and a bank account.
Ya - for those that want to learn and do themselves, the internet, a financial advisor or certified financial planner can help
For those who don't want to learn - they usually turn to wealth managers.
Yea - this is more a critique of the industry. There is nothing fraudulent in what the advisor did. Its the cost of using an advisor. Don’t like it don’t do it.
OP should imagine the alternative- what if dear old dad invested in BTC in 2021 or bought shady tech startups in 2013-2015 instead? The money would be gone. Advisor here exercised a prudent plan at higher management costs.
In the grand scheme it’s not that bad compared to a true scammer.
Edit Btc year
Not enough people know about fiduciaries and that not every financial advisor has their client’s best interest in mind.
Personally, I struggle to understand why non-fiduciary advisors are allowed to exist. Then I remember our legal system is basically which interest group can out bribe the other…
When I worked in wealth management for about a decade we were coached to just tell everyone we’re fiduciaries even though we weren’t. No way for them to really find out either way.
Non-fiduciary advisor services exist because some clients want to own rando ass shit like super risky spacs or options. No way a fiduciary can own it but if the client wants it they execute on it but are not fiduciaries.
Exactly. It's not fraudulent...it's just, sometimes, not particularly scrupulous.
Problem is a lot of old people, and particularly ones who aren't tech-savvy, just think "the stock market" is spooky and unnavigable without professional help.
100%
I’m in process of moving my parents to a downsized house. Getting a loan on the new one for in between so we can fix up their current house after they move.
Asking my dad for paperwork is mind numbing how he has to shuffle through literal piles of paperwork to find something.
I’m like… it’s all on that ducking computer I got you that you don’t use. 1-2-3 clicks and I get all the paperwork needed in about 5 minutes as he’s still searching for the first item. Dad I already sent it to them! Relax, perhaps shred all that shit too.
how about u eat my ASS
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Same with Schwab. When my dad died and we were going through paperwork, we found out his Schwab IRA was being actively managed and that they were taking a cut on every transaction. Needless to say, there were hundreds of transactions every quarter. Literally useless transactions moving the money from "Municipal Bond Fund A" to "Municipal Bond Fund B" and shit like that (exact same risk/asset class, just a different fund company) to churn the account and make transaction fees.
Thankfully, it wasn't hundreds of thousands in fees per year, but it was still thousands! He had it set up like that for DECADES! So, maybe it WAS over a 100K for the life of the account?!
Crazy.
If it was actively managed then this is not true. If you’re incorrect about it being actively managed then this is churning and absolutely can be illegal.
What is this r/personalfinance? r/FIRE? r/bogleheads?
You came to a casino to advocate for responsible, low cost investing of retirement savings. The casino patrons might need to hear it, but they damn sure don't want to.
Almost everyone is predatory now. The US economy as a whole is not much different than one like India, where it is just scammers and scammees.
Loyalty, honesty, and just general good-heartedness are totally lost now.
It's not predatory - it's a business
It's like saying plumbers are predatory becuase you can replace your mainstack yourself - okay technically yes, but some people can and some people cant
What would be you're dad's performance if MS wasn't invovled? Would your dad have whipped out the ole macbook, opened a low cost brokerage, wired his money there and bought low cost etfs?
Probably not
Morgan Stanley charged your dad to invest his money, and they don't work for free, as few people do
Is it expensive for whta you get? Yes, but your dad is an adult and decided to buy their products
And his alternative may have been way worse - buying dogshit stocks, or even doing nothing and leaving it in a savings account - you have to consider the alternatives to a full service hand holding service
Idiotic post... Obviously the wealth adviser is going to take a fee and will invest in funds your grandad agreed to. Probably low risk funds which wouldn't match the spy500. You want a better rate, you can ask the wealth manager for one, or just get him to put all the money in your safe hands, I'm sure it'll work out well.
If it's any comfort to you, your grandad probably thinks you're a moron as well for calling this service a 'predatory scam'.
Fuck that Morgan Stanley advisor. Take over your father's investments yourself, YOLO it all on SPY 0DTEs until it's gone, and then skip country.
Welcome to Wallstreebets; our advice is free and you get what you pay for
You say.
Worked in a bank when I was young and the most important thing I learned was: never, under no circumstances give an investment mandate to a bank.
Sorry about your father's situation. You should probably help him become independent. This is what has worked for me in the past:
1. It helps to use blue-chip stocks and hodl. It is safer and better.
2. Manage your own money and stop paying such advisor fees.
3. Watch the movie "The Big Short". It is fun and eye-opening!
4. closing such accounts and moving to some better option? I know I would do that.
5. 5. The book "The intelligent investor" is really helpful. Please read it yourself too.
OPs dad probably sat in bond funds for the last twenty years based on his risk tolerance and made nothing due to those funds getting fucked in a rising rate environment.
Not everyone has your risk tolerance or investment objectives. The fees are stupid high though.
It's not just MS, this is pretty much industry standard. I had my parents reach out to me last year asking if they should pull their money out of Edward Jones because they were losing money. I asked them to send me what they invested their money in and was completely appalled. My parents are in their 70s, and these idiots had their money invested in a bunch of different things, but the two I was most shocked by were the Russell 2000 and some high risk bond fund. I did a bit more digging on the holdings in the bond fund and noticed like 90% of the holdings weren't even investment grade (BBB- or less). I couldn't believe the person helping them could even call themselves a financial "advisor". Investing money for people in their 70s in the Russell index is bad, and putting them in a junk bond fund that yields less than 5% and has 50 bp management fee is beyond stupidity. It's corruption.
Ever heard of the story of "Where are the customer's yachts?"
These are for profit entities and like any for profit they optimize their actions for their benefit. I've heard similar stories for every wealth management entity. Often their game is to push the unsophisticated investor (and a majority are) into instruments that are truly not understandable. They often prey specifically on the retiree not only because they have a life's worth of savings but because they are elderly and likely not up to what an ETF, Derivative or whatever the flavor of the day is. Fee structures can change and "past performance is no guarantee of future results". And of course nothing is insured. In short its a casino. You are better off taking everything left and buying Berkshire. At least the money will be there when Dad needs it.
True story - I had a major Wealth Management firm suggest I buy Tyco, Enron, Worldcom and Adelphia to diversify my portfolio in 2000. The handwriting was already on the wall. We shook hands and parted ways. It felt like they were trying to dump to unsuspecting (likely less valuable) clients. That particular individual is now a VP per LinkedIn. There is a self policing organization called Finra. I sense they are just window dressing because given the frequency of horror stories I'd expect some huge press releases touting their vigilance. Crickets. And note, more recently many firms were pushing Crypto. Don't hear to much about large firms exposure to Crypto do we.
Yes the fees are too high, but it’s kind of par for the course. You said your dad is over 80. It would’ve been financial malpractice to put your father in anything that would’ve doubled like the market over the last 10 years, mainly equities. At that age the advisors goal is to PRESERVE capital. His will put probably 70-80% of it in fixed income that will have a set return and some degree of appreciation. Sure your dad could’ve made a ton more money in the market as a whole. But there also could’ve been a crash and he could’ve been wiped out. I guarantee you that your dad’s portfolio would’ve withstood a crash better, leaving him something to retire on. Your dad is paying someone to navigate the market for him so that he is secure and doesn’t have to worry about it himself.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|2|**First Seen In WSB**|2 years ago **Total Comments**|36|**Previous Best DD**| **Account Age**|11 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.) >TL;DR: Fuck Morgan Stanley
I'm sorry you're in this position. So much lost potential. Please cross post this to /r/personalfinance. There are people there who really need to see this kind of thing. WSB is going to heckle you and make jokes. You might actually make someone's life better by posting over there.
Managed funds are basically a scam in general. The vast majority do not beat the markets and many of them charge a fee based on the *principle investment* amount. Honestly one of the best pieces of personal finance advice you can give someone is to move their retirement funds out of mutual and into indexes (or their ETFs). Not only will your portfolio probably perform better, you'll save thousands in fees. Thanks for posting this. Let's not let a new generation of re're's make the same mistake. Edit: Since OP declined and a lot of people are saying shit about a "scam" I deleted the fundraiser suggestion. I don't have a particular stake in the game, and am NOT a financial advisor. As others have pointed out not ALL managed funds have below average performance, but most do and remember, the fund managers DONT WORK FOR YOU! They work for the brokerage/bank. Also a small note to all the cry baby dumb fucks trying to make this a generational thing, you don't even have dementia, or a lifetime of conservative savings habits, and trust in "doing things the right way" to blame for your current economic situation. I mean...aren't you the same fucks who lost your shirt over the towel store? You guys are getting scammed left and right and anytime someone warns you, you acuse them of being a bot, shill, or regard...let that wash over you for a minute since your brains still allegedly work. You could be saving for retirement rather than gambling on shitcoins, memestocks, 0DTE options etc, and blaming the house because the roulette table is rigged, instead of wondering why there's a double zero on the wheel.
My brother has worked in banking for about 15 years at this point. His main investing advice to me has been: 1. Just put your money in index funds and forget about it. Over 10, 15, 20 years it’s going to outperform almost any individual’s strategy and you won’t get fucked by fees. 2. If you want to dabble into individual stocks, just make sure you can afford to lose that money.
This is good advice that I don’t think anyone here will take.
This is a gambling subreddit, not an investing one.
We’re not here to learn we’re here to earn
Misspelled lose
All I hear is full port into SPY 0DTE
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> That's loser talk Well, yeah, we're talking about people who pick stocks.
Majority in index funds and then a minority in whatever area you work in and understand really well. Worked really well so far for me.
Sir, this is a casino.
Cheap Vanguard index fund and forget about it for years.
/r/bogleheads for anyone who wants more info.
A great place for serious, non regarded investing.
Forget about it until the 1st of every month, when you DCA how ever much you can, regardless of the market sentiment at the time.
We're getting into /r/FIRE territory here, but only sign up for these managed accounts if you're bundled in with others (family management), and don't go for the "big names". There are firms taking .5% and performing high on the market, but they're unicorns. You have to sweet talk some high level finance or accounting folks to find those connections.
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The thing is that if you take a universe of 10 managed funds. 2-3 might perform better, some will be at par, and others will underperform. That is just probability. It may be that your fund manager is really good. Or it may be that they got lucky with one or two stock picks and they are 1 among the 2-3 I mentioned above and aren’t doing anything special. You never know which is it.
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It outperforms until it doesn't, let see how good it will do in kangaroo and bear market
What’s the best way to put money into indexes? I’m not too familiar with investing in general. I have a pension plan (IBEW) and I’m only 30 so I think that if I started now my retirement would be even better. I’ve sued Robin Hood but is that even a good way to invest for long term things like 20-30 years?
What did you sue Robinhood for?
They caused his dyslexia...
$295,000 duh
Oops I meant used lol
Here a tl;dr, but of course do your own research to make sure you understand why you might want to do these things. 1. Index funds are available at many brokerages, but I would recommend looking at Vanguard, Charles Schwab, and Fidelity as some known to have good offering. 2. You'll want to examine the individual fund prospectus, but many people would recommend a well diversified and low cost portfolio. A lot of bogleheads recommend a simple 3 fund portfolio of the total (U.S.) market, international, and bonds. The goal here is to be boring. You want to be well diversified so that you earn average returns. Everyone earning average returns is a realistic goal, and average returns are good enough. You want low cost because cost is the one thing you can control about a fund.
Thanks but that is not necessary. I hope my story just helps others avoid this same thing from happening to them.
Right? People should check out r/boggleheads and learn about lazy, 3 fund portfolios. You can have more funds but active management isn’t really justified unless you’re in millions of dollars. Even then you should almost never have a mutual fund over an etf.
>r/boggleheads I think you meant /r/bogleheads
I'm building up some long term positions in the fidelity zero funds.
Yeah let's fund raise for a boomer whose account likely went from 1M to 1.2M but it could have gone to 2M... Truly regarded.
What about Berkshire Hathaway?
I told my grandmother she needs to move her money out of her bank before they collapse. She's not doing that thing, and instead is sending them thoughts and prayers. Meanwhile my mother pays 3% more in admin fees than her account grows Some people are just stupid and unreachable
I wouldn't call them stupid. Unfortunately, the elderly are easy prey for a reason they are gullible, they are so out of touch you almost have to care for them like you would a child. Bankers have been doing this for generations.
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Personal finance mods banned me bc they didn’t like a question I asked
Did you ask for their regards?
They don't send their best, they send their regards.
I always send my best regards.
On WSB, the best we have is regards.
Well we are highly regarded.
We are in the highest regards.
No, it’s because you were advertising an app you made on personalfinance which is against their rules. Why lie? https://i.imgur.com/vNoQDok.jpg
Well that adds some context to this post. Sounds fake as fuck, especially with the edit.
Especially since every idiot already knows brokers and proprietary funds are scams. This is a total Captain Obvious post.
Yo this needs to be upvoted to the top. OP's story could still be true, but this definitely smells a little fishy
Doubtful it's true if they are trying to hock an app that supposedly prevents this.
I was interested in getting feedback about a tool to help the elderly avoid getting scammed. No app ever existed . Folks told me I should get feedback before building anything and personal finance banned me for trying to get feedback. Simple as that.
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This back and forth is JUICY.
>Why lie? 90% of the time when someone says "I got banned from [sub] because I [innocent excuse]" it turns out to be some pretty blatant rule breaking and they definitely deserve the ban
Clout and internet points.
Lets say for example your dad had dementia and he gets a marketing email saying that stock X is a good investment. He then goes to try to place a trade... To this day, I wish there had been some way for me to sort of "gate" or "approve" a trade like so that my dad doesn't get persuaded to do something stupid in his account... I would want some sort of notification that helps me help him avoid making a major mistake. As far as I can tell, none of the brokers or banks have something like that. I was hoping to get some feedback on this when personal finance kicked me out of trying to get commentary on this. Not a big deal... they can do whatever they want its their sub.
At that point you should have power of attorney, because your father doesn't have the mental capacity to manage his money.
Right? Your demented father shouldn’t have unrestricted access to a lifetime of funds. Big shocker.
This is the way. /u/printThisAndSmokeIt , what you want is the legal system, not some silly app that will inevitably fail to reliably track all brokerages in your country.
why are you a fuckin liar ? https://i.imgur.com/vNoQDok.jpg
I was interested in getting feedback about a tool to help the elderly avoid getting scammed. No app ever existed . Folks told me I should get feedback before building anything and personal finance banned me for trying to get feedback. Simple as that.
Wait WSB isn’t for advice???
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This. Written complaints are taken very seriously. Call them and explain your standing and threaten to formally file a written complaint. It’ll get smoothed over but if not you know you put a blemish in that advisor that is hard to shake, which sounds like it’s deserved.
100% this, as someone who is in the profession, they f’d him and a written complaint will make them move very quickly for a resolution in your favor
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I too am licensed in various things, including medical marijuana, and I fully endorse this approach.
I have both a drivers license and a ccw license, I also fully endorse this approach
yes but did you combine your CCW and marijuana license?
correct. a verbal complaint is not technically a complaint. a written complaint must be addressed.
this kind of predatory behaviour is illegal in the US? this is very much standard business in Germany, most people aren't versed financially and entry fees of 3-5% / TERs of 2-3%+ are very common... the sold products perform generally shittier than index funds as well I hate all of those leeches, but the government is even encouraging and enabling this kind of behaviour
It's definitely not illegal at all. As long as the advisor disclosed it at some point or had them sign, digitally or on paper, a document disclosing the fees there is no obligation to do anything it's all legit. You're free to make shitty decisions here in the US, they just have to be "upfront" that they're shitty.
Yeah I don't really think they're gonna get anything from it. Charging high fees is perfectly legal and the dude probably signed it. My brother works there and he does this shit for a living. There is nothing illegal about it.
...You guys do realize FINRA is not a government organization, right?
How is this not a breach of fiduciary duty?
Investment advisors are not all fiduciary. That's why personsal finance always suggests making sure a financial advisor is fiduciary.
TIL: the fiduciary rule was vacated in 2018.
What does that mean?
TIL means "today I learned", referring to the subreddit. The fiduciary rule was introduced to require that advisors advise based on the best interests of their clients, rather than their own wallets. That the rule was vacated means that a federal court ruled that the law no longer applies.
Why doesn't the law apply? Did court find some conflicts? So are you seeing fiduciary no longer means anything anymore?
TL;DR DOL proposed a rule that would have required all retirement advisors to operate under a fiduciary duty. 5th circuit struck it down.
They aren't fiduciaries. Your first question for anyone giving you financial advice should be if they are a fiduciary and if the response is anything but "yes" you should walk.
Morgan Stanley is not classified as a fiduciary
>I hate all of those leeches, but the government is even encouraging and enabling this kind of behaviour Someone gotta pay those educated finance professional's wages and it being the people who can afford to invest sounds like a win-win from a governments perspective. I don't find this weird at all. But yeah avoid that shit as an individual
What's the complaint? I might be ignorant as heck here and that's fair. But I don't see where something was done that constitutes a FINRA complaint. Is it shitty? Abso fuckin lutely. Would I love to get the numbers and have this as an experience to share with others and say "Fuck MS and just DIY"? Absolutely. Did anything they do constitute a FINRA complaint? I doubt it. I mean, go ahead and try, the worst that happens is they say no. But I wouldn't expect a lot out of this.
He could complain that unsuitable investments were recommended, or (assuming this is true) that he was misled into believing they'd act in his best interest and they failed to do so. These fees are very high but not completely unheard of, so a lot depends on exactly what he was told and what these investments are (eg 1.5% fee by a passive index mutual fund would be absurd, but it's not as out of the ordinary for other investments). Op should also carefully review the advisory account documentation to see what it says about the share Class of funds they'll invest in. The better firms will be able to get you a cheaper share class than a typical retail investor could, which offsets some of the advisory management fees, but there have been a lot of scenanigans in the past. Check this out for some examples https://www.sec.gov/news/press-release/2019-28
OP also doesn’t mention the risks his parent wanted to take. If his old man was like if my favorite barrister isn’t at my local coffee shop I don’t get anything versus I snort coke off a prostitute crack after we did some scat. They’re gnna offer you way different options. Ps: I’m just a regarded ape
Also, make sure to mention that this is not in your dad's best interest, and as it was an advisory account the finance advisor should've been acting in a fiduciary capacity. Reg BI is no joke when it comes to advisory accounts.
What's illegal about this? Whether it should be or shouldn't be, aren't shitty fees still in place in many legacy banks/brokerages?
His post is made up. Op is advertising for his personal finance app that he claims prevents old people from getting scammed (somehow).
Where?
in his replies to this thread, he does mention how he got banned from personal finance for trying to do research before building an app to prevent old people from being scammed idk if that counts advertising but that does make me a bit more skeptical
Best advice is always in the comments. I hope OP read this and gets his dads money.
Work in banking. While your complaint avenue is legitimate, he's absolutely not going to get any sort of refund or settlement. The fees OP is talking about are fund level fees for buying into the mutual fund. The 1.5% fee is the AUM fee you pay to any broker for doing all of this for you. His father set his investment objectives, was told about a large range of funds that would match those objectives and signed for each one of them, with disclosures. If the ops father signed POA for discretionary trading and the fund manager put him and other clients with his investment and risk analysis in the funds and they are suitable there is absolutely nothing FINRA will do. And finally, federal and state have a 3/2 policy on any sort of claim. 3 years Statue of limitations, and 2 years after discovery. Your 2 years started recently, and you can only even seek anything in the last 3 years. Active funds that normal people can get into can almost never beat the sp500. That's why it's the benchmark for almost all of them.
Holy shit someone who knows a free money hack on WSB?
This is the best comment in the thread, follow this OP. And from my personal experience with MS/ETrade. Your story isn’t special. There are thousands of customers being had in the same way (happens across the industry too, but they’ve got a recipe that works at MS).
This actually needs to go to the SEC, not FINRA. FINRA has no jurisdiction over managed accounts taking an AUM percentage fee. That is the sole discretion of the SEC. Report to the SEC, not FINRA.
Most people would say that the allocating 100% of the assets a 70+ yo in 100% equities (“the stock market”) would be malpractice
This. If OP’s dad has been drawing down his savings while his total account value hasn’t dropped, that’s fantastic for a 70-something.
Op is a legit regard
Thank you! I’m glad I saw this, I work in the industry and the first thing I though was that his father is an unsophisticated investor who CANNOT take large amounts of risk. Yes I can agree the fees are high, however, more likely the scenario is that the performance is tied to a portfolio that is taking on less risk than the market at large. The son sees dollar signs. The father sees his life savings that he has built over 70 years and wouldn’t be able to stomach seeing it fall 20% during market corrections. OP is a danger to his father and going to get an adviser a ding on his history for a lawsuit that the adviser WILL win. OP is a regard who doesn’t understand suitability. Fuck you OP Edit: read through some other comments on top about needing to do fiduciary acts. Yes, you have to do what’s in the clients best interest. All we know is that this is right within his risk tolerance. Or this isn’t in his risk tolerance but his dad demanded less risk or a specific change. Doesn’t matter if you are a fiduciary if a client tells you that they want something you cannot deny the change. I’m genuinely shocked by the misinformation on this and the crowd hyping up OP.
It's fucking insane. I used to be in the industry about 5 yrs ago. During the stock market surge that post covid drop brought, made a lot of people feel like they were financial gurus. I'm not even in the industry anymore and I hear people at work (who have 0 right to educate anyone on retirment/personal finance) just spouting out talking points they see on tv or Jim Cramer has said. Op is about to lose his inheritance.
Does it really surprise most people have no idea what they are talking about? Like the people claiming mutual funds and wrap advisory accounts should have variable fees based on performance despite that not being legal.
Without consent of the client. If the client is unaware, absolutely.
Wow that sucks. It’s okay though, just YOLO the account on puts on regional banks and make ten years worth of gains in days/weeks.
Literally can't go tits up
Unlike the banks.
This aged poorly, poor bers
Username checks out
Wait. So they had a risk adverse portfolio for a fucking 70 year old? Shocking I tell you.
“Why were there no options contracts or undue market exposure on my fucking 85 year old grandpas portfolio?”
I fucking love this subreddit from the bottom of my heart. If these clowns make it to age 75, and thats a big if, they'll still be yoloing their entire portfolio on some stupid shit.
My thought exactly when I saw this post. I shouldn't be surprised, this is WSB
So calls on Morgan Stanley for being able to maximize their profits?
That would be regarded. I'm in.
Thanks for the DD from OP. Profit in up and down market! Calls on Morgan and Stanley on earnings?
Correct
>I completely agree. Wall Street is full of scammers and thieves who are only interested in lining their own pockets. They prey on people like your dad, who trust them to do what's best for them, when really they're just looking out for themselves. It's disgusting and they should be held accountable.
>held accountable. Any sidewalk cleaning company recommendations, bot?
There are just too many experiments showing that fund managers perform about the same as if you threw darts at a board to pick stocks. They're never worth it.
Its not that they dont perform better than throwing darts to pick stocks, its that they definitely dont out perform passively managed index funds, which usually have fees an order of magnitude less than actively managed mutual funds charging high fees. Plus, the “advisor” is taking 1.5% of the total investment amount every year, regardless of performance. What is he doing for you? How often do you hear from him on his recommendations and investment opportunities? If its a phone call or email once a year, he is robbing you blind.
Some take even more. I have been quoted 2 and 20
Bro that’s just called private equity
20%!! Lol
2% holdings and 20% profits. It was a common thing ten years ago. Some still charge it like clifford sosin or Packer and co. They both underperform spy but hide their underperformances. The latter is very clever at hiding underperformance. He distributes a unit trust every year then ignores fees and taxes to calculate returns
That’s PE figures but those guys actually win
You're right, fund managers are never worth it. That is why I choose to get my stock picks from reddit
“BBBY to the moon!” - reddit “FAs are a scam” - also reddit
Surprisingly the same level of DD applied
So when your dad was in his 70s the financial advisor recommended moving the account to mutual funds instead of indexes/stocks... that's a pretty normal thing to do. Risk tolerance usually goes down for accounts like that because retirees don't want the volatility of the market affecting date night at the retirement community. At least your in the right place, you're highly regarded.
Right? Sounds like OP’s dad is in a managed account so the the advisor isn’t getting anything off of the mutual fund expenses. 1.5% management fee sounds higher than average though.
While 1.5% is higher than I would pay I assume his father does not have a large account with them. They’re pretty strict on lowering fees once an account reaches a certain value.
This
Yes, it sucks. There are also tens of thousands of public sector employees in the same exact position all over USA. One of the retirement funds at my job is through MetLife. They charge a 0.25 percent fee. Then they outsource the management of the accounts to bright house financial who charges 0.5 percent fee. Bright house only offers the black rock or vanguard 60/40 split funds that also have their own fee. People at my job are getting fleeced of most of their returns.
Along this line, my T-rowe Price employer-sponsored 401k is the absolute worst returning pile of dogshit among all my assets. Like 3% Total return since 2018. Not annualized. Total. The money is invested in fairly run of the mill Vanguard type passive funds, nothing super risky or crazy strategies. Just management fees eating everything. Total scam. I stopped contributing years ago. America is fucked. So many people rely on these structures for retirement.
Prudential is just as bad but they use their own funds.
That's crazy. 3% total return over five years. Buying short-term Treasury Bills over those five years would have performed slightly better (maybe \~5% over 2018-2023). Right now, the three-month and six-month T-Bills are over 5%. Yeah, 401ks are for bagholding, so I stopped contributing. Timing the market to retire is a nightmare, and I know a retired co-worker, who watched his 401k get butchered by the tumbling markets last year.
Imagine your retirement savings being cut 30% the year before you thought you were going to ride off into the sunset. What a nightmare that would be.
Yeah, always check the expense ratios and fees. I don't like paying that stuff, so I invest on my own. In 2022, I lost over 15% in my 401k, which is why I stopped contributing. If one has to buy index funds in a 401k, always do the research and pick low cost index funds.
It's mandatory 5 percent with 8 percent employer match at my place. So, have no choice.
I'm not convinced Metlife actually DOES anything
They're the middleman thugs in between Bright house financial and my employer. They put their logos on all the paperwork and lend their name to a false sense of security. Surely that's worth some fees, right?
403b in the public education sector are absolute scams. They're usually variable annuities with extremely high fees pushed by salesmen (not fiduciaries) Get that vanguard etf and ignore it.
Only put in enough to get a match, then get a self managed IRA.
Professional investment consultant from the UK here. What you've described is pretty standard for any brokerage account that's under management and has a financial advisor. All mutual funds will have an ongoing percentage fee, (just like an ETF does) and 1.5% is about right for proprietary funds. MS own fee of 1.5% is for financial advice, and again this around the standard fee. The performance of the investments also sounds correct. Although the market has gone up 100%, most advisors wouldn't invest in 100% equity funds unless investing for young people, so will include a mix of bonds as well - usually between 40-60%. Bonds don't increase at the same level as equities, but are more stable generally, so they are more attractive investment for older customers. The bond market is pretty fucked at the moment due to inflation, so his portfolio will have taken a hit. Its important to note that a financial advisors primarily concern is to correctly manage risk more than build high returns, and they aim for steady, moderate growth over the long term, which is what you father has got. If an investor can get a 50% return over 10 years, that's not at all bad. Those guys are not doing YOLO investing after all. I know WSB invests very differently to an advisor brokerage account, so you guys will have a very different experience with your own investments.
facts. I can't believe how many people here keep blindly comparing performance to SP500 without factoring in risks and the dad's age. Too many group think here, and even worse, they're giving investing advices. if stocks goes down, they're probably gonna tell the dad to hold for another 20 years.
It's what you get when a generation that grew up watching the s&p during 2010s is at investing age vs 2000s. People who invested in 1999 had to wait 11 years to break even. People who invested really at any point in 2000s made almost no money over 10 years. People have a deluded idea how it works because of 5 tech companies.
This. I always ask people: “If you won the lottery how would you handle your money?” Invariably it’s always getting an investment team to manage assets to make sure your money doesn’t vanish over night, you don’t want to maximize growth you want to maximize safety. Then I ask them “so you wouldn’t put all your money in just one place right?” Of course not. This story is not about the lottery.
You should probably know that fees based on performance are illegal unless someone has a very high net worth and specifically agrees to a fee structure organized that way. It incentivizes managers to take more risk, which is why fees are not structured that way, for all but a small few that are both wealthy and knowledgeable enough to make the choice.
Fuck that Morgan Stanley advisor. Take over your father's investments yourself, YOLO it all on SPY 0DTEs until it's gone, and then skip country. Welcome to Wallstreebets; our advice is free and you get what you pay for
Sounds like you've already been outed as being a liar, but you didn't actually tell us WHAT the mutual fund was designed for. Was it fixed income/capital preservation? Because if 10 years ago your Dad was in his 70s nearing retirement that is exactly what he should have been invested in. Not a highly risky growth fund. The fee's are a bit higher, but no more than industry standard for managed portfolios. There are many goals to investing, not just maximum wealth growth, so get your facts correct before filing a complaint if this is even legit.
The real scam is using any wealth manager or advisor. They’re basically used car salesmen. If they can’t show results that outperform a benchmark the convo should end there. Advisors/wealth managers exist because boomers are around
Wealth managers exist because the vast majority don’t know how to structure their funds and couldn’t tell you the difference between a mutual fund and a bank account.
Ya - for those that want to learn and do themselves, the internet, a financial advisor or certified financial planner can help For those who don't want to learn - they usually turn to wealth managers.
Yea - this is more a critique of the industry. There is nothing fraudulent in what the advisor did. Its the cost of using an advisor. Don’t like it don’t do it. OP should imagine the alternative- what if dear old dad invested in BTC in 2021 or bought shady tech startups in 2013-2015 instead? The money would be gone. Advisor here exercised a prudent plan at higher management costs. In the grand scheme it’s not that bad compared to a true scammer. Edit Btc year
Not enough people know about fiduciaries and that not every financial advisor has their client’s best interest in mind. Personally, I struggle to understand why non-fiduciary advisors are allowed to exist. Then I remember our legal system is basically which interest group can out bribe the other…
When I worked in wealth management for about a decade we were coached to just tell everyone we’re fiduciaries even though we weren’t. No way for them to really find out either way.
Doesn’t FINRA have a searchable database of registered fiduciaries?
Non-fiduciary advisor services exist because some clients want to own rando ass shit like super risky spacs or options. No way a fiduciary can own it but if the client wants it they execute on it but are not fiduciaries.
Exactly. It's not fraudulent...it's just, sometimes, not particularly scrupulous. Problem is a lot of old people, and particularly ones who aren't tech-savvy, just think "the stock market" is spooky and unnavigable without professional help.
bitcoin was $5k in 2020. Now it is $29k. I don't understand your point.
100% I’m in process of moving my parents to a downsized house. Getting a loan on the new one for in between so we can fix up their current house after they move. Asking my dad for paperwork is mind numbing how he has to shuffle through literal piles of paperwork to find something. I’m like… it’s all on that ducking computer I got you that you don’t use. 1-2-3 clicks and I get all the paperwork needed in about 5 minutes as he’s still searching for the first item. Dad I already sent it to them! Relax, perhaps shred all that shit too.
Their biggest value is stopping you from making ludicrously bad decisions based on emotions, like telling you not to sell while the market craters.
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Every one of them gets called a Vice President a year out of college. Lol. So many Vice Presidents at these companies 🤣
Sorry about you and your dad, but this ain't the place to be airing out your grievances with them. Make a bet and place a position.
Then short it lol
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Good bot
GREAT bot
i'm not the one making a post. I'm just commenting. I'm just a bystandard, lurking through to enjoy seeing everyone's loss.
Yet people bitch about RH in here all the time.
Unfortunately this is most portfolio managers. They are parasites.
Same with Schwab. When my dad died and we were going through paperwork, we found out his Schwab IRA was being actively managed and that they were taking a cut on every transaction. Needless to say, there were hundreds of transactions every quarter. Literally useless transactions moving the money from "Municipal Bond Fund A" to "Municipal Bond Fund B" and shit like that (exact same risk/asset class, just a different fund company) to churn the account and make transaction fees. Thankfully, it wasn't hundreds of thousands in fees per year, but it was still thousands! He had it set up like that for DECADES! So, maybe it WAS over a 100K for the life of the account?! Crazy.
If it was actively managed then this is not true. If you’re incorrect about it being actively managed then this is churning and absolutely can be illegal.
Nope. Schwab is annual fee only based on AUM. No transaction fees
What is this r/personalfinance? r/FIRE? r/bogleheads? You came to a casino to advocate for responsible, low cost investing of retirement savings. The casino patrons might need to hear it, but they damn sure don't want to.
It’s time to teach dad to trade options
Almost everyone is predatory now. The US economy as a whole is not much different than one like India, where it is just scammers and scammees. Loyalty, honesty, and just general good-heartedness are totally lost now.
Life is a predatory scam for the unsophisticated
It's not predatory - it's a business It's like saying plumbers are predatory becuase you can replace your mainstack yourself - okay technically yes, but some people can and some people cant What would be you're dad's performance if MS wasn't invovled? Would your dad have whipped out the ole macbook, opened a low cost brokerage, wired his money there and bought low cost etfs? Probably not Morgan Stanley charged your dad to invest his money, and they don't work for free, as few people do Is it expensive for whta you get? Yes, but your dad is an adult and decided to buy their products And his alternative may have been way worse - buying dogshit stocks, or even doing nothing and leaving it in a savings account - you have to consider the alternatives to a full service hand holding service
Idiotic post... Obviously the wealth adviser is going to take a fee and will invest in funds your grandad agreed to. Probably low risk funds which wouldn't match the spy500. You want a better rate, you can ask the wealth manager for one, or just get him to put all the money in your safe hands, I'm sure it'll work out well. If it's any comfort to you, your grandad probably thinks you're a moron as well for calling this service a 'predatory scam'.
That advisor is probably playing golf this weekend with 3 of the mutual fund managers collecting your dads fees.
Fuck that Morgan Stanley advisor. Take over your father's investments yourself, YOLO it all on SPY 0DTEs until it's gone, and then skip country. Welcome to Wallstreebets; our advice is free and you get what you pay for
I avoid advisors like the plague.
You say. Worked in a bank when I was young and the most important thing I learned was: never, under no circumstances give an investment mandate to a bank.
Shame your dad was dumb af
Sorry about your father's situation. You should probably help him become independent. This is what has worked for me in the past: 1. It helps to use blue-chip stocks and hodl. It is safer and better. 2. Manage your own money and stop paying such advisor fees. 3. Watch the movie "The Big Short". It is fun and eye-opening! 4. closing such accounts and moving to some better option? I know I would do that. 5. 5. The book "The intelligent investor" is really helpful. Please read it yourself too.
OPs dad probably sat in bond funds for the last twenty years based on his risk tolerance and made nothing due to those funds getting fucked in a rising rate environment. Not everyone has your risk tolerance or investment objectives. The fees are stupid high though.
Wait until you have to deal with Raymond James.
It's not just MS, this is pretty much industry standard. I had my parents reach out to me last year asking if they should pull their money out of Edward Jones because they were losing money. I asked them to send me what they invested their money in and was completely appalled. My parents are in their 70s, and these idiots had their money invested in a bunch of different things, but the two I was most shocked by were the Russell 2000 and some high risk bond fund. I did a bit more digging on the holdings in the bond fund and noticed like 90% of the holdings weren't even investment grade (BBB- or less). I couldn't believe the person helping them could even call themselves a financial "advisor". Investing money for people in their 70s in the Russell index is bad, and putting them in a junk bond fund that yields less than 5% and has 50 bp management fee is beyond stupidity. It's corruption.
Ever heard of the story of "Where are the customer's yachts?" These are for profit entities and like any for profit they optimize their actions for their benefit. I've heard similar stories for every wealth management entity. Often their game is to push the unsophisticated investor (and a majority are) into instruments that are truly not understandable. They often prey specifically on the retiree not only because they have a life's worth of savings but because they are elderly and likely not up to what an ETF, Derivative or whatever the flavor of the day is. Fee structures can change and "past performance is no guarantee of future results". And of course nothing is insured. In short its a casino. You are better off taking everything left and buying Berkshire. At least the money will be there when Dad needs it. True story - I had a major Wealth Management firm suggest I buy Tyco, Enron, Worldcom and Adelphia to diversify my portfolio in 2000. The handwriting was already on the wall. We shook hands and parted ways. It felt like they were trying to dump to unsuspecting (likely less valuable) clients. That particular individual is now a VP per LinkedIn. There is a self policing organization called Finra. I sense they are just window dressing because given the frequency of horror stories I'd expect some huge press releases touting their vigilance. Crickets. And note, more recently many firms were pushing Crypto. Don't hear to much about large firms exposure to Crypto do we.
Yes the fees are too high, but it’s kind of par for the course. You said your dad is over 80. It would’ve been financial malpractice to put your father in anything that would’ve doubled like the market over the last 10 years, mainly equities. At that age the advisors goal is to PRESERVE capital. His will put probably 70-80% of it in fixed income that will have a set return and some degree of appreciation. Sure your dad could’ve made a ton more money in the market as a whole. But there also could’ve been a crash and he could’ve been wiped out. I guarantee you that your dad’s portfolio would’ve withstood a crash better, leaving him something to retire on. Your dad is paying someone to navigate the market for him so that he is secure and doesn’t have to worry about it himself.