Investment advisor advisor

April 12, 2008 2:33 PM

Investment advisor advisor. Is it unreasonable to ask for a complete one-page list of all my investments with account numbers and approximate values?

I'm using a commission-based investment advisor. I trust the guy about as far as I can throw him, and a lot of his advice hasn't been great, but he's a family friend and I detest anything financial, so I'm not really motivated to change. I know I should eventually drop him for a fee-based advisor, but that's another question for another day.

My question is simpler: Is it unreasonable to ask my advisor to give me a single page listing of all our investments with account numbers, values, etc. My wife and I have about a dozen different mutual funds, annuities, etc, and it's difficult to keep track of. If $10K were to just disappear we wouldn't even know.

When I asked the advisor for this information in a concise printed form he balked, saying in effect that "I have all that information in my files, and I don't have time to summarize it for you".

If this is a completely reasonable request, could I at least use this as a reason to throw the bum out? (He and my wife go way back). What information do other advisors give you on every meeting?

posted by schrodycat to work & money (25 comments total)

It is completely reasonable to ask for a summary of your investments from your investment advisor. You could certainly use this as a reason to fire him. But you don't *need* a reason beyond the fact that you're not comfortable with him.

In my case, I interviewed a few people until I found someone that was responsive and that I felt comfortable with.
posted by nessahead at 2:47 PM on April 12, 2008

When I asked the advisor for this information in a concise printed form he balked

RED FLAG.

Big one.
posted by Asparagirl at 3:01 PM on April 12, 2008

Get a new advisor. He should be more than happy to supply you with this information.
posted by Roger Dodger at 3:03 PM on April 12, 2008 [1 favorite]

I'm with Asparagirl. Similar thing happened to a friend of mine who was using her sister's friend as a commission-based "advisor." She asked, he balked. She insisted, turns out he had lost all of her money and hadn't told her about it because he was "sure he could get it back."
posted by Eringatang at 3:07 PM on April 12, 2008

Aren't you getting monthly statements listing exactly this information? I don't particularly enjoy the financial stuff either but it's MY MONEY and I'm damn sure watching how it's doing on a monthly basis. If 10K were to disappear I would sure notice and want an explanation at the very least.

On Monday morning, tell the guy you need this list immediately. And find a new advisor ASAP. I don't see a single reason to let this guy manage your money for even another day. Seriously - get interested in your own money. In at least keeping track of it. Don't just hand your hard-earned dough to someone and then sit back and hope for the best. That's just .. crazy.
posted by Kangaroo at 3:09 PM on April 12, 2008

Is it unreasonable to ask my advisor to give me a single page listing of all our investments with account numbers, values, etc.

Absolutely not. You should insist on this information in a regular quarterly report, and he should prepare it for you anytime on short notice if you request it. If he's a commission compensated advisor he may whine about the extra work, but that's ridiculous. (BTW, this is one of several reasons that commission-based financial advice is terrible for you.)

More broadly, where are your assets being held? They should probably be in a custodian account at some large investment bank like Schwab. You should have direct access to your accounts in your name without having to go through the advisor.

I trust the guy about as far as I can throw him, and a lot of his advice hasn't been great, but he's a family friend

Get away right now. Transfer all your assets to some place simple and safe. It is insane to have someone managing your money that you don't trust and whom you think gives bad advice. Particularly someone who gets evasive when you ask him where your money is.
posted by Nelson at 3:09 PM on April 12, 2008

but he's a family friend

Never. And now you know: never again.
posted by dhartung at 3:23 PM on April 12, 2008

Actually, you need to receive that on a monthly or quarterly basis. His "I have it in my files" is an incredibly lame excuse. He should have that readily available so that he can adjust your investment mix to offset market activity and risk. How is he doing his job, if he doesn't know your investment mix?

Fired.
posted by 26.2 at 3:29 PM on April 12, 2008

As the others have said, that's pretty bizarre. Not only should it not be a problem for him to do that for you, he should ALREADY BE DOING IT. Seriously. Even my bank sends me a concise quarterly summary of all my investments with them, current balances, etc. It's about 10 pages long, but the top sheet is exactly the summary you're looking for.
posted by jacquilynne at 3:30 PM on April 12, 2008 [1 favorite]

DTMFA. (Drop That Miserable Financial Advisor.)
posted by The Bellman at 3:31 PM on April 12, 2008 [2 favorites]

Well, hold on. Maybe I'm missing something. You should be getting a statement no less than once per quarter. If you're not getting that, it's indeed a red flag.

On the other hand, if you want something more concise or in a different format than what they're giving you now, and they won't give it to you, it's probably because your adviser is not "set up" to do such a thing-- he doesn't have the technology to run a current concise statement. Further, if I was running a compliance office for a brokerage firm, I would forbid him from doing such a thing on a bespoke basis. It's nothing but a liability for the firm. What if he misplaces a zero?
posted by Kwantsar at 3:36 PM on April 12, 2008

On reflection, this is worth a more serious answer. I have had three litigations I can recall in recent years that involved exactly this situation (right down to the "family friend" angle, which is very common). In each case, the advisor claimed he had the information and would get it together soon, but he "didn't have time right now", making this claim over and over. In each case, the advisor was in fact running one or another variant of a ponzi scheme. Seriously, this is not even a little bit uncommon and these guys very often exploit family and other close relationships.

If you can't get the information immediately (and perhaps even if you can), ask him to immediately liquidate all or a substantial portion of the portfolio and return it to you. If he does, great. If he gives you excuses ("it's tied up in illiquid investments", and "you don't want the massive capital gains" are common ones) you might consider talking to an attorney.

I don't want to worry you, but I have seen this scenario too many times (as a lawyer) not to be a little concerned.
posted by The Bellman at 3:38 PM on April 12, 2008 [1 favorite]

If you can't get the information immediately (and perhaps even if you can), ask him to immediately liquidate all or a substantial portion of the portfolio and return it to you.

This is an overreaction, at this point, given the possible tax bill that would await schrodycat in this situation.
posted by Kwantsar at 3:43 PM on April 12, 2008

Just to clarify, I am, of course, getting quarterly statements from all the various financial institutions, but like 75% of the world, I just stuff it in a pile. It would take a while to create such a summary myself, but I could do it.

And Kwantsar probably has it more or less correct: the guy is pretty low tech.

So to rephrase my question: is it standard practice for an advisor to present such a 1 page summary to his clients?
posted by schrodycat at 3:47 PM on April 12, 2008

So to rephrase my question: is it standard practice for an advisor to present such a 1 page summary to his clients?

Generally, no. In an office that adheres to best compliance practices, it's likely that doing so would be a deviance from procedure, a one-off requiring approval by a supervisor.

And upon rereading your last comment, it appears that your advisor intermediates your relationship with a number of financial institutions, rather than the traditional wirehouse setup where his institution consolidates on one platform or uses one prime broker. This adds further complications.

If this guy is getting rich off of your business, he should nonetheless probably find a way to do what you want. On the other hand, if you've placed $50,000 with him at 5% commissions (his firm keeps roughly half of that) over multiple registrations and meetings requiring scores of paperwork and overhead, he's probably well within his rights telling you to do it yourself. Especially if you're on your way out the door to another firm.
posted by Kwantsar at 4:00 PM on April 12, 2008

Yes. It is standard practice for an adviser to present such a summary. I get one every month. A one page summary listing my holdings, their current value, their value last month and any loss/gain. I periodically get statements from the individual companies we've invested in, but I also get and scrutinize that monthly statement from my financial planner. I know exactly how much money I've given him to invest for me and I can see exactly where it is and how it is performing.

And I never had to ask him for it - it's provided as a matter of course, for all clients.
posted by Kangaroo at 4:02 PM on April 12, 2008

Kwanstar: If schrodycat is getting quarterly statements from financial institutions that represent something like his investment value -- at least within an oder of magnitude -- then I agree. I didn't realize that was the case. If schrodycat were not getting any statements at all, or if he were only getting "statements" prepared by the advisor in Word (or something similar) then I would say it would not be an overreaction at all. If you doubt that advisors purporting to deal with large sums of money could create "statements" like that, google Mark Yagalla. He's one of the higher profile advisors whose victims I (sadly) ended up representing and dealing with a few cases like that makes you very quick to advise people to grab their cash when they can.

Again, schrodycat, from what you say it sounds like Kwanstar is right and I'm wrong: you needn't necessarily liquidate. To answer your rephrased question, an advisor should provide a summary. It won't necessarily be one page (depending on how many funds you are invested in) but it should be clear and readable and provided monthly -- not every smaller advisor does this, but the major houses all do (not only in their private client groups, but in their retail groups as well) and reputable smaller houses do as well, especially on request. If your advisor doesn't provide one, that could conceivably be ok. If he WON'T provide one, you should get rid of him. I should have stuck with my first post: DTMFA.
posted by The Bellman at 4:09 PM on April 12, 2008

Me again. I posted without previewing so I didn't see Kwanstar's second answer -- the one where he says the advisor may not be making enough money off you to provide you with a statement. As I noted, I agree with Kwanstar that liquidating might be too drastic in light of the statements you've been getting from other sources but I strongly disagree with everything in that second post. Best practices are to provide monthly statements and if the advisor doesn't feel like he's making enough money off you to do his job, that's his problem not yours. Never forget that you are the client.
posted by The Bellman at 4:15 PM on April 12, 2008

Regardless of whether there's anything shady going on or not, it sounds like he's not providing the information in a way that is useful to you. He may be the best advisor in the world, but if he's not meeting your needs you should look at taking your business elsewhere.
posted by blue_beetle at 4:16 PM on April 12, 2008

Best practices are to provide monthly statements

For brokerage accounts, yes. For mutual-fund-only accounts, well, there are plenty of fine fund families that provide only quarterly statements.

and if the advisor doesn't feel like he's making enough money off you to do his job, that's his problem not yours. Never forget that you are the client.

Well, sure, it's his problem. But it's not necessarily "his job." You can fire him; he can fire you, etc., etc.
posted by Kwantsar at 4:32 PM on April 12, 2008

Agree with Bellman.

If he has discretionary authority over an account, it does not matter at all how little you have invested or how much work you're causing him. He owes you a duty.

If, by contrast, he merely recommended that you buy certain funds that paid him a commission, and you did so, you're in less danger.

If you decide to leave and don't want to go to cash, you need to revoke his authority to give instructions on your behalf to the institutions that are holding your money.

Choke back your contempt for finance and sort through your statements. If you don't, you're forced to take him at his word anyway, so a statement from him is useless.
posted by Phred182 at 4:37 PM on April 12, 2008

Back when I was an admin assistant for a financial advisor, I used to do this for -all- of our clients. Each page would list each account number, the funds, the amount, change in value over time, and graph these values. To start one from scratch it took about two or three hours (going back a few years to graph the change) for about a dozen different investments. I used to do much much bigger ones. Updating them took about 15 minutes.

Yeah. If they value your business, it's really not out of the question.
posted by billy_the_punk at 6:03 PM on April 12, 2008

And to clarify, I just threw it all into an excel spreadsheet. It was a huge convenience for our clients receiving both monthly and quarterly statements depending on their holdings. As far as the liability issues go, it simply said on the printout, in big bold letters "This is an estimate, used for information purposes only, you should look at your official statements blah blah blah."

Although this is a nice service, and not a requirement, all I'm saying is that it really doesn't take that much time to do.
posted by billy_the_punk at 6:07 PM on April 12, 2008

When my dad died, the "family friend" who was managing his finances tried to screw me. He wanted to move all the assets into high front-load mutual funds where they take a certain percentage (in this case 4-5%) of your initial investment. I talked to an uncle on the other side of the family who did financial advising and found out that based on the family friend's recommendations, the friend would get more than 3% of the money up front for steering me to those funds, and more every year after. I asked him for some other funds with no load, and he came back with funds that only had 2-3% up front, which still benefited him at my expense. I dropped him and managed my money myself. In fact, I bought the Morningstar software he used to generate things for $200, and learned to use it. I track the original portfolio he suggested just to see how bad it would have been, and it would have been really, really bad, particularly compared to the simple things I did - index funds and a few sector mutual funds.

There are no family friends when it comes to money. Find someone else, or learn to do it yourself.
posted by procrastination at 6:10 PM on April 12, 2008

Find yourself a new financial advisor. Friends and money are dangerous territory. If you can't trust him then you're not going to be happy following his advice. For the money you're paying, then you may as well feel comfortable with the advice he's giving.

FWIW all my accounts send me statements direct and/or I can check them online directly. My advisor emails me a summary every month.

Feeling you're not in control of your money is worrying, do something about it.
posted by arcticseal at 2:27 AM on April 13, 2008